Question & AnswerQ&A (Republic Act No. 9474)
The title is "Lending Company Regulation Act of 2007."
The policy is to regulate the establishment of lending companies, ensure their operations are efficient and stable, prevent practices prejudicial to public interest, and establish minimum requirements and standards.
A lending company is 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.
A lending company shall only be established as a corporation. Existing lending investors organized as sole proprietorships or partnerships must cease lending business one year after the Act's effectivity.
The minimum paid-in capital required is One million pesos (P1,000,000.00). Existing companies have up to three years to comply, and the SEC may prescribe higher capitalization if necessary.
At least a majority of the voting capital stock must be owned by Filipino citizens. Foreign ownership exceeding 49% existing before the Act cannot be increased but may be reduced and cannot increase again beyond 49%. Also, foreign nationals can only own stock if their country grants reciprocal rights to Filipinos.
Lending companies may grant loans with amounts, interest rates, and charges agreed between the company and debtor, complying with the Truth in Lending Act (RA 3765) and the Consumer Act of the Philippines (RA 7394). The Monetary Board may also set interest rates adjusted for economic and social conditions.
The SEC can create a division to regulate lending companies, issue implementing rules, require reports, exercise visitorial powers, and impose administrative sanctions such as suspension, revocation, and fines.
Such lending companies shall be under the supervision and examination of the Bangko Sentral ng Pilipinas (BSP), pursuant to Republic Act No. 7653.
Penalties include fines from Ten thousand pesos (P10,000) to Fifty thousand pesos (P50,000), imprisonment from six months up to ten years, or both. These apply to persons engaging in lending business without SEC authorization, misrepresentation, false statements, or officers knowingly violating this Act.