the lending company regulation act of 2007.pptx

7/25/2019 The Lending Company Regulation Act of 2007.pptx

1/19

The Lending Company

Regulation Act of 2007By: Bayudan, Lajara, Pagdaganan, Prietos, Saligumba,

Santos, Sumaway


2/19

Why is this law relevant

to corporate finance?


3/19

Section 2 of the Lending Company Regulation ct of2!!" pro#ides:

$%t is hereby declared the policy of the State toregulate the establishment of lending companies andto place their operation on a sound, efficient andstable condition to deri#e the optimum ad#antages

from them as an additional source of credit& to pre#entand mitigate, as far as practicable, practicesprejudicial to public interest& and to lay down theminimum re'uirements and standards under whichthey may be established and do business()


4/19

What are the mostsignificant provisions of the

law?


5/19

Policy considerations


6/19

*nder Section 2 of Company Lending Regulationct of 2!!" or R(( +", it is the policy of the

State to regulate the establishment of lendingcompanies and to place their operation on asound, efficient and stable condition to deri#e theoptimum ad#antages from them as an additionalsource of credit& to pre#ent and mitigate, as faras practicable, practices prejudicial to the publicinterest& and to lay down the minimumre'uirements and standards under which theymay be established and do business(


7/19

Relevant/salient

defined terms


8/19

Affliate

- shall refer to a corporation, the #oting stoc. of which, to thee/tent of fifty percent 01!3 or less, is owned by a ban. or 'uasi-

ban. which is related or lin.ed to such institution through commonstoc.holders or such other factors as may be determined by the4onetary Board of the BSP(

u!sidiary

-shall refer to a corporation more than fifty percent 01!3 of the

#oting stoc. of which is owned by a ban. or 'uasiban.(

"ranch #ffice

5 shall include an e/tension office, unit, satellite office, etc( of alending company with a Certificate of uthority to operate as such(

Certificate of Authority

-shall refer to a certificate issued by the S6C in fa#or of a lendingcompany to engage in the business of lending regulated by R((7o( +" and its %mplementing Rules and Regulations(


9/19

Charges on loan

shall refer to agreed upon interest rate, ser#ice charge, penalty, discount, andsuch other charges incidental to lending acti#ity(

$onetary Assets

-shall refer to total assets inclusi#e of #aluation reser#es and deferred incomebut shall not include in#estments 8 in real estate, in shares of stoc. of realestate de#elopment corporations or in real estate based projects, leaseholdrights and impro#ements, fi/ed assets, foreclosed properties andprepayments(

%etworth

- shall refer to the e/cess of assets o#er liabilities, net of appraisal surplus,unboo.ed #aluation reser#es, capital adjustments, o#erstatement of assetsand unrecorded liabilities(

&uasi'"an(

- shall refer to a non-ban. financial institution authori9ed by the BSP toengage in 'uasi-ban.ing functions and to borrow funds from more thannineteen 0+3 lenders through the issuance, endorsement or assignment withrecourse or acceptance of deposit substitutes as defined in Section +1 of Republic ct 7o(";18 0the $7ew Central Ban. ct)3 for purposes of relendingor purchasing of recei#ables and other obligations(


10/19

Who enforces the law?


11/19

Rule < of R +"

$all lending companies shall be under the

super#ision of the Securities and6/change Commission, to which the saidcompanies shall file their correspondingreports=manuals in accordance with theschedules pro#ided for in the law)


12/19

$>he S6C may also e/amine the boo.s ofaccounts and records of the lending

company& it may also, at its discretion,impose upon a lending company specificfines for e#ery #iolation which they wouldcommit( ?owe#er, lending companies which

are subsidiaries and affiliates of ban.s and'uasi-ban.s shall be subject to BSPSuper#ision and e/amination un accordancewith Republic ct 7o( ";18()


13/19

Who are affected by thelaw?


14/19

@ebtor - borrower or a person granted aloan by the lending company(

Lending Company - corporation engagedin granting loans from its funds( >hese

include Ban.ing, %n#estment ?ouses, Loanssociations, Ainancing Companies,Pawnshops, %nsurance Companies(


15/19

Reportorial/

registration requirements


16/19

)orm of #rgani*ation5

- lending company shall !e esta!lishedonly as a corporation+

- 6/isting lending in#estors organi9ed as singleproprietorships or partnerships shall be

disallowed from engaging in the business ofgranting loans to the public one year afterthe date of effecti#ity of this ct(

- Lending company shall conduct business only

after it has been granted the authority tooperate by the S6C( 0Sec( R +"3


17/19

Capital 5

- >he minimum paid 'in capitalof any lendingcompany which may be established after theeffecti#ity of this ct shall be #ne million pesos+

- Lending companies established and in operationprior thereto shall comply with the minimumcapitali9ation re'uired under the pro#isions of thisSection within such time as may be prescribed by

the S6C which time shall, in no case, be less than8 years from the date of the effecti#ity of this ct(

- S6C may prescribe a higher minimumcapitali9ation if warranted by circumstances(0Sec(1 R +"3


18/19

Citi*enship

' At least a ma,ority of the voting capital stoc(shall be owned

by citi*ens of the -hilippines+- >he percentage of foreign-owned #oting stoc. in any lending

company e/isting prior to the effecti#ity of this ct, if suchpercentage is in e/cess of + of the #oting stoc., shall not beincreased but may !e reducedand, once reduced, shall not !eincreasedthereafter beyond +of the #oting stoc. of the lending

company(- >he percentage of foreign-owned #oting stoc.s in any lending

company shall be determined by the citi9enship of the indi#idualstoc.holders( %n the case of corporations owning shares in a lendingcompany, the citi9enship of the indi#idual owners of #oting stoc. insuch corporations shall be the basis in the computation of the

percentage(- 7o foreign national may be allowed to own stoc. unless the country

of which he is a national accords reciprocal rights to Ailipinos(0Sec(; R +"3


19/19

Applica!le case laws+

the lending company regulation act of 2007.pptx

Documents