Question & AnswerQ&A (Republic Act No. 9474)
The title of Republic Act No. 9474 is the "Lending Company Regulation Act of 2007."
The policy is to regulate the establishment of lending companies, ensuring their sound, efficient, and stable operation to maximize their benefits as an additional source of credit, prevent practices prejudicial to public interest, and set minimum requirements and standards for their establishment and business.
A lending company is defined as a corporation engaged in granting loans from its own capital funds or from funds sourced from not more than nineteen (19) persons. It excludes banking institutions, investment houses, savings and loan associations, financing companies, pawnshops, insurance companies, cooperatives, and other credit institutions already regulated by law.
At least a majority of the voting capital stock of a lending company must be owned by Filipino citizens. Foreign-owned voting stock exceeding 49% prior to the Act’s effectivity cannot be increased. Foreign nationals may only own stock if their country grants reciprocal rights to Filipinos.
The minimum paid-in capital is One million pesos (P1,000,000.00). Those existing prior to the Act must comply within a period prescribed by the SEC, which shall not be less than three years from the Act’s effectivity.
No, lending investors organized as sole proprietorships or partnerships are disallowed from granting loans to the public one year after the effectivity of this Act.
The Securities and Exchange Commission (SEC) is authorized to regulate and supervise lending companies, except those which are subsidiaries or affiliates of banks or quasi-banks, which are supervised by the Bangko Sentral ng Pilipinas (BSP).
A person may be fined not less than P10,000.00 and not more than P50,000.00, or imprisoned for at least six months up to ten years, or both, at the court's discretion. This applies to persons or officers who operate or represent a lending company without SEC authorization or violate provisions of the Act.
Lending companies must maintain books of accounts and records as required by the SEC and BIR, maintain separate books if engaged in other businesses, use the Manual of Accounts prescribed by the BSP until a new manual is issued by the SEC, and issue appropriate instruments and documents to evidence lending and borrowing transactions.
The Truth in Lending Act (RA 3765), the Consumer Act of the Philippines (RA 7394), and other existing laws apply insofar as they do not conflict with this Act.