Loan/Credit Disclosure Requirement

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SEC-CORPORATION FICE DEPARTMENT MEMORANDUM CIRCULAR NO. 003, S. 2001: Loan/Credit Disclosure Requirement

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Title Supreme Court: Loan/Credit Disclosure Requirement

Law: Sec-corporation Finance Department Memorandum Circular No. 003, S. 2001

Decision Date: Mar 30, 2001

The SEC mandates financing companies to provide a standardized Disclosure Statement on Loan/Credit Transactions to ensure transparency in credit costs, with penalties for non-compliance escalating from fines to potential suspension of operating authority.

disclosure statement

loan transaction

credit transaction

A

Required Use of a Disclosure Statement by Financing Companies

Financing companies (FCs) must use a prescribed "Disclosure Statement on Loan/Credit Transaction"
The statement is mandated by the SEC through its circular

Execution and Handling of the Disclosure Statement

The statement must be signed by the borrower and the authorized signatories of the financing company before loan release
Two copies must be prepared: one kept at the financing company’s premises for SEC inspection, another given to the borrower
Records must be available for inspection during office hours by the SEC or authorized representatives

Penalties for Non-Compliance

First Offense: P20,000 fine plus P100 per day of continued violation
Second Offense: P25,000 fine plus P100 per day of continued violation
Third Offense: P30,000 fine plus P100 per day of continued violation
Fourth Offense: Suspension or revocation of the certificate of authority to operate

Effective Date

The circular becomes effective fifteen (15) days after publication in a newspaper of general circulation

Legal Authority and Adoption

Issued under the powers vested by existing laws to the SEC
Adopted on March 30, 2001
Signed by Lilia R. Bautista, Chairman of the SEC Corporation Finance Department

END