Financing Company Information & Documentary Requirements Philippines

Financing Company Information & Documentary Requirements Philippines
A corporation in the Philippines requires at least 5 incorporators and 5 directors. An incorporator is a founding shareholder. The incorporators and directors can be the same persons. Every director must own at least one share of the corporation. All the directors must be residents of the Philippines. The corporate secretary must be a Filipino citizen and resident of the Philippines. The treasurer must be a Filipino citizen and resident of the Philippines. No person can be the President and the Corporate Secretary at the same time or the President and Corporate Treasurer at the same time.
Definition: Financing companies’ hereinafter called companies, are corporations, except banks, investments houses, savings and loan associations, insurance companies, cooperatives, and other financial institutions organized or operating under other special laws, which are primarily organized for the purpose of extending credit facilities to consumers and to industrial, commercial, or agricultural enterprises, by direct lending or by discounting or factoring commercial papers or accounts receivable, or by buying and selling contracts, leases, chattel mortgages, or other evidences of indebtedness, or by financial leasing of movable as well as immovable property.
Rights and Power – Financing companies shall have the following powers:
Engage in quasi-banking and money market operations with the prior approval of the Bangko Sentral ng Pilipinas;Engage in trust operations subject to the provisions of the General Banking Act upon the prior approval of the Bangko Sentral ng Pilipinas;Issue bonds and other capital instruments subject to the pertinent laws, rules and regulations;Rediscount their paper with government financial institutions subject to relevant laws, rules and regulation;Participate in special loan or credit programs sponsored by or made available through government financial institutions;Provide foreign currency loans and leases to enterprises that earn foreign currency by exports or other means, subject to existing laws and regulations promulgated by the Bangko Sentral ng Pilipinas.The SEC shall allow the inclusion of the foregoing rights and powers in the Articles of Incorporation of a financing company after submission by the applicant financing company of the appropriate license/authority issued by the government agency involved.
Foreign Ownership of a Financing Company100% foreign ownership of a financing company is allowed Republic Act No. 10881, lapsed into law on July 17, 2016. No foreign national may be allowed to own stock unless the country of which he is a national accords reciprocal rights to Filipinos. In the case of corporations owning shares in a lending company, the citizenship of the individual owners of voting stock in such corporations shall be the basis in the computation of the percentage. More than 40% foreign ownership requires a minimum paid-in capital of US$ Two Hundred Thousand (USD200,000.00).
Minimum Capital RequirementThe minimum required paid-in capital is:
Ten Million Pesos (PHP10,000,000.00) for the head office in Metro Manila and other first class cities.Five Million Pesos (PHP5,000,000.00) in other classes of citiesTwo Million Five Hundred Thousand Pesos (PHP2,500,000.00) in MunicipalitiesAdditional Capital Requirement – A financing company shall be required to put up minimum additional capital for each branch, agency, extension office or unit as follows:
One Million Pesos (PHP1,000,000.00) : Metro Manila and other first class cities;Five Hundred Thousand (PHP500,000.00) : Second class and other cities;Two Hundred Fifty Thousand (PHP 250,000.00) : Municipalities.Evaluation Guideposts – The number of branches, agencies, extension offices or units to be established shall depend upon the capacity of the company to conduct expanded operations and/or upon the capacity of the area wherein the proposed branch, extension office, agency or unit will be established to absorb new entities engaged in financing, as may be determined by the SEC.
For a financing company granted with special rights and powers mentioned in Rights and Powers hereof additional capital required shall be based on letter (c) above or on the capitalization requirement under the rules and regulations promulgated by the appropriate government agency, whichever is higher.
Corporate NameThe corporate name of financing companies shall contain the term”Finance Company,” “Financing Company,” Finance and Leasing Company” and “Leasing Company”.
Size of Loan and InterestA financing company may give loans in such amounts and reasonable interest rates and charges as may be agreed upon between the lending company and the debtor: Provided, That the agreement shall be in compliance with the provisions of Republic Act No. 3765, otherwise known as the “Truth in Lending Act” and Republic Act 7394, otherwise known as the “Consumer Act of the Philippines”. As of August 19, 2013 there are no usury laws which limit the interest rate a lending investor my charge loan recipients. The Supreme Court has reduced the interest rate, in some cases as being excessive, iniquitous, unconscionable and exorbitant, hence, contrary to morals (“contra bonos mores”), if not against the law.In accordance with the Truth in Lending Act and prior to the consummation of the transaction, a financing company shall furnish each debtor a disclosure statement, setting forth, to the extent applicable, the following information:
The principal amount of loan;Rate of interest of the loan;iii. Service or processing fee, if any;
Amortization schedule;Any penalty charge for late amortization payment;REPUBLIC ACT NO. 8556“Sec. 5. Limitation on purchase discounts, lease rentals, fees, service and other charges. — The Monetary Board of the Bangko Sentral ng Pilipinas is hereby empowered to prescribe, in consultation with financing companies and the Securities and Exchange Commission, the maximum rate or rates of purchase discounts, lease rentals, fees, service and other charges of financing companies, and to change, eliminate or grant exemptions from or suspend the effectivity of such rules whenever warranted by prevailing economic and social conditions.”
Requirements for Securing an Authority to Operate a Financing Company from the SEC (Secondary License)
Cover SheetApplication FormInformation SheetPersonal Information Sheet of Directors and OfficersValid NBI Clearance of each FILIPINO Director and OfficerForeign Directors and Officers:a. Photocopy of● Alien Certificate of Registration, or● Immigration Certificate of Registrationb. Photocopy of Passport● Showing valid visa or stay in the PhilippinesC. Clearance from Bureau of Immigration* All photocopies shall be verified against the originalClearance from Bangko Sentral ng Pilipinas● If applicant is a subsidiary or affiliate of a bank and/or non-bank financialinstitution with quasi banking licenseManual on Corporate Governance● If foreign participation in voting stock is more than 40%; or● If total assets is PHP50M or more; or● If commercial paper issuer, either exempt or registeredManual on Anti-Money Laundering● If foreign participation in voting stock is more than 40%; or● If total assets is PHP10M or more; orBoard Resolution on the Adoption of the Manuals● Certified by the Corporate SecretaryFormat of disclosure Statement on Loan/Credit Transactions● Indicating the name of the companyNotarized Bank Certificate of Deposit of the Paid Up CapitalAll documents required for incorporationSEC Licensing Fees (for secondary license):
Initial Application Fees shall be paid to SEC at the time of filing of application1) Head Office –A fee of 1/8 of 1% of the paid-up capital of the financing company + LRF of 1% (minimum of P10.00) shall be paid for the issuance of a Certificate of Authority to Operate as a Financing Company.2) Branch, extension office, unit or satellite officeA fee of 1/8 of 1% of the minimum assigned capital + LRF of 1% (minimum of P10.00) of the branch, extension office, unit or satellite office shall likewise be paid for the issuance of an original Certificate of Authority.
Annual fee –An annual fee shall be paid not later than forty five (45) days before the anniversary date of the CA.
Head Office – Annual Information Statement Filing fee of P10,000 + 1% LRFAnnual fee of 1/8 of 1% of the paid-up capital of the financing company + LRF of 1% (minimum of P10.00)
Branch Office – Annual Information Statement Filing fee of P10,000 + 1% LRFAnnual fee of 1/8 of 1% of the minimum assigned capital of the financing company + LRF of 1% (minimum of P10.00)
Commencement of OperationsA corporation/company that has been duly registered and granted a Certificate of Authority to Operate as a Financing Company shall commence operations within one hundred twenty (120) days from date of grant of such authority. Failure to commence operations within said period shall be a ground for the suspension of its CA.
REPUBLIC ACT NO. 8556Section 9 – Loans and InvestmentsUnless otherwise authorized by the Commission:
The total investment of a financing company in real estate and in shares of stock in a real estate development corporation and other real estate based projects shall not at any time exceed twenty-five (25%) of its net worth.More than fifty (50%) percent of the funds of a financing company shall be used or invested in financing company activities; Provided, that in the computation of the amount of funds used or invested in financing company activities, investments in government securities with maturity of not more than one (1) year and special savings deposits shall be taken into consideration;Reportorial Requirements
General Information Sheet (GIS) – Within thirty (30) days from annual stockholders meeting, as stated in its SEC approved bylaws.Audited Financial Statements prepared by an external auditor accredited by the SECfor fiscal year ending December 31: on or before April 15. After April 15, based on advisory to be issued by SEC, for fiscal year other than December 31: within One Hundred Twenty (120) days from end of fiscal year, as stated in its SEC approved by-laws.Special Form of Financial Statements – 30 days from the due date of Audited Financial StatementsAnnual Information Statement – Every 30th day of January for Commercial Paper IssuerSemi-Annual Financial Statements–    1st Semester:  45 days from cut-off (Cut off: June 30)2nd Semester: 45 days from cut-off (Cut off: December 31)AMLA Compliance Form – if authorized to issue SecuritiesThe above stated information is gathered from the SEC and other laws enforce at the time of compilation, it is not legal advice, is not to be acted on as such, may not be current and is subject to change without notice.

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