SEC Revokes Registrations Of 836 Illegal Lending Companies2 min read
The Securities and Exchange Commission (SEC) has shut down 836 more companies engaged in lending activities without the necessary certificates and licenses.
The SEC said the companies were registered as lending companies but did not have the certificate of authority to operate as such, which is a requirement under Republic Act No. 9474, or the Lending Company Regulation Act.
Section 4 of Republic Act No. 9474, or the Lending Company Regulation Act of 2007, requires that a lending company be established only as a corporation.
It further provides that “no lending company shall conduct business unless granted an authority to operate by the SEC.”
The SEC Corporate Governance and Finance Department (CGFD) revoked the registration of the latest batch of corporations and partnerships that registered as lending companies but failed to obtain the required Certificate of Authority to Operate as Lending Company (CA).
You can check out the official list from the SEC of the revoked and suspended lending companies here.
(Read: NPC Cracks Down On Lending Apps Over Harassment Complaints)
Fines and penalties
On November 14, 2016, the Commission allowed SEC-registered lending companies without the required CA to apply for and secure it on or before April 30, 2017.
To date, a total of 2,783 lending companies have obtained the required certificate of authority from the SEC in order to engage in the business, while a total of 2,080 lending companies were found to be in violation of the law.
The Commission En Banc also resolved on July 4 to revoke the certificate of authority of Z.C. Buen Mano Lending Corporation for failure to comply with the reportorial and other compliance requirements prescribed by the Commission.
As part of its efforts to formalize small lending businesses in the country, the SEC issued Memorandum Circular No. 18, Series of 2016, to streamline the documentary requirements for financing and lending companies.
(Read: How To Avoid Becoming A Victim Of Investment Scams)
Under the memorandum circular issued on November 8, 2016, the Commission no longer requires financing and lending companies to submit quarterly reports of issuers of exempt commercial paper, certification of the corporate secretary on the attendance of directors to board meetings and corporate governance scorecard.
Any person who shall engage in the business of lending without a validly subsisting authority to operate from the SEC may face a fine ranging from P10,000 to P50,000 or imprisonment of six months to 10 years, or both, under Section 12 of the Lending Company Regulation Act.
That said, per SEC Chairperson Emilio Aquino, the agency remains relentless and continues to validate the authority of more corporations that engage in such illegal activities.
“To protect both the integrity of legitimate lending companies and the interests of borrowers, the commission will remain relentless in going after informal lenders as well as those engaging in predatory, abusive, and unfair lending practices,” said Aquino.
Other sources: Rappler, Manila Bulletin, SEC