Question & AnswerQ&A (SEC)
Financing companies are primarily organized to extend credit facilities to consumers and industrial, commercial, or agricultural enterprises through direct lending, discounting or factoring commercial papers or accounts receivable, buying and selling contracts, leases, chattel mortgages, or other evidences of indebtedness, or financial leasing of movable and immovable property.
Financing companies located in Metro Manila and other 1st Class Cities must have a minimum paid-up capital of P10,000,000.
At least 40% of the voting stock of a financing company must be owned by citizens of the Philippines.
Financing companies may engage in quasi-banking and money market operations, trust operations, issue bonds and capital instruments, rediscount papers with government financial institutions, participate in special loan programs by government financial institutions, and provide foreign currency loans to exporters, all subject to BSP approval.
The company shall be subject to a fine of not less than Ten Thousand Pesos (P10,000), and may be granted a 60-day grace period before the Commission can revoke its Certificate of Authority after notice and hearing.
The total credit extended to directors, officers, and stockholders shall not exceed 15% of the financing company’s net worth, including loans to related parties such as spouses, relatives within the first degree, and entities controlled by them.
Registration documents include the articles of incorporation, information sheet, personal information of directors and officers, police and NBI clearances, certificates of good moral character, bank credit information, BSP clearance if a subsidiary of a bank, and any other documents required by the Commission.
Sanctions include suspension or revocation of the Certificate of Authority to Operate, fines starting at Ten Thousand Pesos plus P100 per day for continuing violations (capped at One Hundred Thousand Pesos), and other sanctions within SEC's power.
Financing companies must file quarterly reports within 45 days of the fiscal quarter end, including statements of condition and income, aging schedules of receivables and liabilities, lists of officers and shareholders; audited financial statements within 120 days after fiscal year end; and notify changes in key personnel within 7 working days.
No, corporations are prohibited from including discounting, factoring, and leasing as secondary purposes unless specifically authorized under RA 8556.