Republic of the Philippines

Securities and Exchange Commission

Secretariat Building, PICC Complex,
Roxas Boulevard, Pasay City

Corporate Governance and Finance Department

NOTICE

The Commission invites comments on the attached draft of the Amended

Implementing Rules and Regulations (IRR) of Republic Act No. 8556 or the Financing
Company Act of 1998.

To ensure that all relevant organizations and shareholders, especially those from
the private sector, are able to take part in the drafting of the amendments in the IRR, we
are exposing the same for public comments. For the early implementation of the
Amended IRR, please submit your duly signed written comment and/or suggestions
on or before August 15, 2017 by any of the following means of communication:

Letter Addressed to:

Director Justina F. Callangan
Corporate Governance and Finance Department (CGFD)
Ground floor, North Wing Hall, Secretariat Bldg. PICC Complex,
Vicente Sotto St., 1307 Pasay City

E-mail [email protected]; [email protected]

Fax No. (02) 818.5990

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 AMENDED RULES AND REGULATIONS TO IMPLEMENT THE PROVISIONS
OF REPUBLIC ACT NO. 8556 (THE FINANCING COMPANY ACT of 1998)

To effectively carry out the provisions of Republic Act No. 8556 (The Financing
Company Act of 1998), the Securities and Exchange Commission, pursuant to the
powers vested in it under said Act, Republic Act No. 1143 and Presidential Decree No.
902-A, as amended, hereby promulgate the following amended rules and regulations:

SECTION 1.Definition of Terms

The following definition of terms shall apply for purposes of these Rules:

a) “Financing companies” are corporations, except banks, investment 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 evidence of indebtedness,
or by financial leasing of movable as well as immovable property;

b) “Branch”, “Agency”, “Extension office”, “Satellite Office”, or “Unit” is a place

separate and outside the Head Office, where financing activities and business
decisions conducted in the Head Office are likewise performed;

c) “Off-site location” such as but not limited to “point-of-sale” (POS),

“merchant” or “kiosk”, is a place where the financing company has existing
agreement with a third party allowing it to offer, promote, market its finance
products and services to the latter’s clients and to assist, disseminate, collect
and process the information of said clients.

d) “Commission” shall mean the office of the Securities and Exchange Commission
of the Philippines;

e) “Funds” shall mean total assets inclusive of valuation reserves and deferred
income but shall not include investments in real estate, in shares of stock of real
estate development corporations or in real estate based projects, leasehold rights
and improvements, fixed assets, foreclosed properties and prepayments.

f) "Credit" shall mean any loan, mortgage, financial lease, deed of trust, advance or
discount, any conditional sales contract, contract to sell, or sale or contract of sale
of property or service, either for present or future delivery, under which, part of

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 all or the price is payable subsequent to the making of such sale or contract; any
contract, any option, demand, lien or pledge, or to the other claims against, or for
the delivery of, property or money, any purchase, or other acquisition of or any
credit upon the security of, any obligation or claim arising out of the foregoing,
and any transaction or series of transactions having similar purpose or effect;

g) "Financial leasing" is a mode of extending credit through a non-cancellable lease

contract under which the lessor purchases or acquires, at the instance of the
lessee, machinery, equipment, motor vehicles, appliances, business and office
machines, and other movable or immovable property in consideration of the
periodic payment by the lessee of a fixed amount of money sufficient to amortize
at least seventy percent (70%) of the purchase price or acquisition cost, including
any incidental expenses and a margin of profit over an obligatory period of not
less than two (2) years during which the lessee has the right to hold and use the
leased property with the right to expense the lease rentals paid to the lessor and
bears the cost of repairs, maintenance, insurance and preservation thereof, but
with no obligation or option on his part to purchase the leased property from the
owner-lessor at the end of the lease contract;

h) "Purchase discount" is the difference between the value of the receivable

purchased or credits assigned, and the net amount paid by the financing
company for such purchase or assignment, exclusive of fees, service charges,
interest and other charges incident to the extension of credit;

i) "Lease rentals" shall refer to the periodic payments made by the lessee to the lessor
under Section 1 (e), above;

j) "Receivable financing" is a mode of extending credit through the purchase by, or

assignment, to a financing company of evidence of indebtedness or open
accounts by discounting or factoring;

k) "Discounting" is a type of receivables financing whereby evidence of indebtedness

of a third party, such as installment contracts, promissory notes, and similar
instruments, are purchased by, or assigned to, a financing company in an
amount or for a consideration less than their face value;

l) "Factoring" is a type of receivables financing whereby open accounts, not

evidenced by a written promise to pay supported by documents such as but not
limited to invoices of manufacturers and suppliers, delivery receipts and similar
documents, are purchased by, or assigned to, a financing company in an amount
or for a consideration less than the outstanding balance of the open accounts;

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 m) "Paid-up capital" refers to the amount paid for the subscription of stock in a
corporation including the amount paid in excess of par value;

n) "Networth" is the excess of assets over liabilities, net of appraisal surplus,

unbooked valuation reserves, capital adjustments, overstatement of assets and
unrecorded liabilities;

o) “Digital Financing” refers to financing through the use of digital

infrastructure such as mobile or internet and involving very limited in-person
contact and interference.

SECTION 2. Form of Organization. — Financing companies shall be organized in the

form of stock corporation in accordance with the provisions of the Corporation Code of
the Philippines, subject to the following:

a. Equity ownership

A Lending Company may be owned up to One hundred percent (100%)

by foreign nationals (as amended by R.A. 10881).

b. Minimum capital requirements:

1. 40% Foreign owned:

i. P10,000,000.00 for financing companies located in Metro

Manila and Other 1st Class Cities

ii. P5,000,000.00 for financing companies located in other

classes of Cities

iii. P2,500,000.00 for financing companies located in

Municipalities

2. More than 40% Foreign Owned:

i. US $250,000.00 or its Philippine peso equivalent* for financing

companies located in Metro Manila and Other 1st Class Cities

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 ii. US $225,000.00 or its Philippine peso equivalent* for financing
companies located in other classes of Cities

iii. US $200,000.00 or its Philippine peso equivalent* for financing

companies located in Municipalities
*Networth shall not be less than minimum paid-up capital requirements.

Financing Companies duly existing and in operation before the effectivity

ofthis Act shall comply with the minimum capital requirement within one (1) year
from the date of the said effectivity.

c. Other Requirements:

i. Where land is concerned, the Financing Company shall comply with

the constitutional provision on foreign ownership of land (Article
XII, Section 7).

ii. Foreign Financing Companies shall be required to hire at least sixty

percent (60%) Filipino employees with rights and privileges
provided for under the Labor Code of the Philippines and other
applicable laws.

iii. The corporate-name of financing companies shall contain the term

"financing company", "finance company", or "finance and investment
company" or other title or word(s) descriptive of their operations and
activities as a financing company.

iv. In accordance with the provision of Section 23 of the Corporation

Code, the majority of the Board of Directors of Financing Companies
established under the provisions of RA 10881 shall be residents
ofthe Philippines.

SECTION 3. Rights and Powers. — Financing companies shall have the following
powers: —

a. Engage in quasi-banking and money market operations with the prior

approval of the Bangko Sentral ng Pilipinas;

b. Engage in trust operations subject to the provisions of the General

Banking Act upon prior approval by the Bangko Sentral ng Pilipinas;

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 c. Issue bonds and other capital instruments subject to pertinent laws, rules
and regulations;

d. Rediscount their paper with government financial institutions subject to

relevant laws, rules and regulations;

e. Participate in special loan or credit programs sponsored by or made

available through government financial institutions;

f. Provide foreign currency loans and leases to enterprises that earn foreign
currency by exports or other means, subject to existing laws and rules and
regulations promulgated by the Bangko Sentral ng Pilipinas.

The Commission 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.

SECTION 4. Requirements for Registration. —

a. Registration papers to be submitted to the Commission

Any stock corporation may be registered as a financing company

by filing with the Commission an original plus (+) three (3) copies of an
application to operate as a financing company under R.A. 8556, signed
under oath by its President, together with the following documents in the
prescribed forms:

1. All documents required for registration as a corporation;

2. Information Sheet of registrant company;

2.1. The company should disclose therein if it will market its

financial products as follows:

a. Traditional Marketing:
a.1. By securing a CA for a branch, agency, extension
office, satellite office, or unit;

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 b. Digital Marketing in accordance with Section 8 (b) of
this Rules);

c. Through an Off-site location such as POS.

3. The following documents are required and shall apply both to

new and existing Financing Companies:

1. Cover Sheet
2. Application Form
3. Notarized Personal Information Sheet of Directors & officers
using the prescribed format by the Commission.

4. For Filipino Directors and Officers:

i. Original copy of NBI clearance with right thumb

print and reflecting the residential address as stated
in the Information Sheet & Articles of
Incorporation;

ii. Application Form;

iii. Personal Information Sheet of each of the directors

and officers regardless of position;

iv. Bank credit information to be issued by his

depository or creditor bank(s), if any;

For Foreign Directors and Officers:

i. Original copy of NBI Clearance with right thumb

print and reflecting the residential address as stated
in the Information Sheet & Articles of
Incorporation/General Information Sheet (GIS), if
applicable;

ii. Original and Photocopy of the following:

a. Alien Certificate of Registration Identification

Card (ACR i-Card) or Special Resident Retiree’s
Visa (SRRV); or

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 b. Immigration Certificate of Registration

Subject to determination of the Department of

Foreign Affairs (DFA), Bureau of Immigration (BI) and
the Philippine Retirement of Authority (PRA), only
authorized and valid ACR i-Card/SRRV shall be
recognized by the Commission.

In case the issuance of the authorized ACR i-

Card/SRRV is pending before the appropriate agency,
the concerned incorporator or shareholder shall submit
a proof of filing of the application for ACR i-
Card/SRRV and submit said ACR i-Card/SRRV to the
Commission within thirty (30) days after its issuance.

iii. Original and Photocopy of Passport showing valid

visa or stay in the Philippines;

iv. Original copy and Photocopy of Clearance from the

Bureau of Immigration.

5. Clearance from the Bangko Sentral ng Pilipinas, if the

applicant financing company is a subsidiary or affiliate of a
bank and/or non-bank financial institution with quasi-
banking license.

6. Manual on Corporate Governance shall be required if the

following conditions exist:

a. if the foreign participation in voting stock is more than

forty percent (40%); or
b. if the total assets amount to at least Fifty Million (Php
50,000,000.00) or more; or
c. if the corporation is a commercial paper issuer, either
exempt or registered.

7. Manual on Anti-Money Laundering shall be required if:

a. Foreign participation in voting stock is more than

forty percent (40%); or

b. If the total assets amount to at least Ten Million

(Php 10,000,000.00) or more

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 8. Board Resolution on the Adoption of the Manuals Certified
by the Corporate Secretary;

9. Format of Disclosure Statement on Loan/Credit Transactions

indicating the name of the Company;

10. Notarized Bank Certificate of Deposit of the Paid-up

Capital;

As additional requirements for Existing Financing Company

Applicants, the following documents shall be required:

a. Report of an Independent CPA on the conduct and

result of the verification procedures required under
SEC Memorandum Circular No. 6, Series of 2008
(MC6S08);

b. Management Representation under MC6S08;

c. Latest GIS;

d. Latest required Audited Financial Statements; or

Notarized Interim Financial Statements signed by the
President and Treasurer;

e. All documents required for Filing of Amended Articles

of Incorporation/Certificate of Increase in Capital
Stock; and

f. Monitoring Clearance from the appropriate

Department.

11. Such other documents as may be required by the Commission.

b) Publication of Notice and Order

Upon receipt of the above registration papers of a proposed

financing company, the Commission shall cause the Notice and Order to
be published by the applicant company at its expense in a newspaper of
general circulation in the Philippines once a week for two (2) consecutive
weeks.

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 The Notice and Order shall state, among others, the name of the
proposed financing company, the capital structure, and the names and
residences of its directors.

c) Opposition to Registration

Any interested party may oppose the registration of a financing

company in writing, personally or through counsel, within fifteen (15)
days after the last date of the publication of the Notice and Order. If the
Commission finds that the requirements of R.A. 8556, its implementing
rules and regulations and other pertinent laws have been complied with
and that no valid reason exists for the disapproval of the application, the
Commission shall issue a Certificate of Authority to Operate as a
Financing Company.

SECTION 5.Issuance of Certificate of Filing of Articles of Incorporation and By-Laws:

Certificate of Authority to Operate and Commencement of Operations. —

a. The Commission shall register the Articles of Incorporation and issue the
Certificate of Authority to Operate as Financing Company to any
proposed financing company if it is satisfied that the establishment of such
company will promote public interest and convenience and:

1. All the requirements of R.A. 8556, other existing laws, and

applicable rules and regulations to engage in the business for
which the applicant is proposed to be incorporated, or organized,
have been complied with;

2. The organization, direction and administration of the applicant, as

well as the integrity and responsibility of the organizers and
administrators, reasonably assure the protection of the interest of
the general public; and

3. Proof of the publication of Notice and Order for registration is in

accordance with Sec. 4 (b) hereof.

b. A corporation that has been duly registered and granted a Certificate of

Authority to Operate as a Financing Company in accordance with law and
this Rules shall commence operations within one hundred twenty (120)

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 days from date of grant of such certificate. Failure to operate within the
one hundred twenty (120) day period shall subject the financing company
to a fine of not less than Ten Thousand (P10,000.00) Pesos.

c. Notwithstanding failure to operate as aforestated, a financing company

may be granted a grace period of another sixty (60) days from the expiry
date of the first one hundred twenty (120) days within which to commence
operations. Failure to operate within the extended period shall empower
the Commission, after notice and hearing, to revoke its Certificate of
Authority.

SECTION 6.Branches, Agencies, Extension Offices, Satellite Offices or Units. —

a. Certificate of Authority — No financing company shall establish or

operate a Branch, Agency, Extension Office, Satellite Office, or Unit
without a prior Certificate of Authority (CA) to be issued by the
Commission. The application for a CA filed under this section shall be
accompanied by the following documents:

1. Information sheet of the proposed Branch, Agency, Extension

Office, Satellite Office, or Unit;

2. Application Form;

3. Information Sheet;

4. Original NBI clearance of the Branch Manager, Administrative

Officer and Cashier with right thumb print and reflecting the
residential address as stated in the Information Sheet;

5. Clearance from the Bangko Sentral ng Pilipinas, if the applicant

financing company is a subsidiary or affiliate of a bank and/or
non-bank financial institution with quasi-banking license.

6. Monitoring Clearance from the appropriate Department.

7. Registration Documents (i.e., Articles of Incorporation, Amended

Articles of Incorporation, Certificate of Increase of Capital Stock,
Certificate of Authority of Head Office, Latest General
Information Sheet, Latest Audited Financial Statements/Interim
Financial Statements)

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 8. Such other documents as may be required by the Commission.

The above application shall be published in accordance with the

provisions of Sec. 4(b) of these Rules.

b. Evaluation Guideposts — The number of Branch, Agency, Extension

office, Satellite Office, or Unit 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, Agency, Extension
office, Satellite Office, or Unit will be established to absorb new entities
engaged in financing, as may be determined by the Commission.

c. Additional Capital Requirement — A financing company shall be required

to put up minimum additional capital for each Branch, Agency, Extension
office, Satellite Office, or Unit as follows:

Location of Branch or Additional Capital Required Agency or Extension

Office or Unit

Metro Manila and Other

1st Class Cities P1,000,000

Other classes of cities P500,000

Municipalities P250,000

For a financing company granted with special rights and powers

mentioned in Section 3 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.

d. Prescribed Period to Operate — Such Branch, Agency, Extension office,

Satellite Office, or Unit shall operate within one hundred twenty (120)
days from the issuance of the Certificate of Authority (CA) and failure to
operate within such period shall subject said Branch, Agency, Extension
office, Satellite Office, or Unit to a fine of not less than Ten Thousand

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 (P10,000.00) Pesos or revocation of the CA, after due hearing at the
discretion of the Commission.

e. Term of Authority to Operate — The CA to operate a Branch, Agency,

Extension office, Satellite Office, or Unit shall be coterminous with that
of the Head Office.

SECTION 7. Off-site location. –

a. Reporting Requirement – A financing company shall report to the
Commission the address of its Off-site location/s and pay the fees under
Section 10 hereofat least thirty (30) days before their actual operation.

Financing companies with existing Off-site location/s prior to the

approval of this Implementing Rules and Regulation (IRR) shall report
the address of its Off-site location/s and pay the corresponding fees
within sixty (60) days from the approval of this Amended IRR.

b. Activities Allowed – A financing company shall only perform the

following activities in its Off-site location/s:

1. Offer, market, promote its products and services to the public

by way of display of tarpaulin or any other similar material
or make available/distribute product brochures;

2. Conduct customer due diligence, or “Know-your-Client”

(KYC) procedure as required by law;

3. Advise and/orassist clients in filling up loan applications;

4. Transmit said loan applications electronically to the Head

Office, or Branch, Agency, Extension Office, Satellite Office
or Unit for evaluation and approval;

5. Disclose, explain and/or provide, prior to the consummation

of the transaction, printed copy of the loan document
containing the information required by law to be disclosed;

6. Such other analogous activities except underwriting, credit

verification and scoring, approval or disapproval of loan
application and collections.

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 SECTION 8. Digital Financing

a. Financing companies may do Digital Financing under the following

terms and conditions:

b. Thirty (30) days prior to engaging in Digital Financing, financing

companies shall submit to the Commission a written notice of such
intent together with a description of the process and system that will be
used for Digital Financing, which shall include, but not limited to the
following:

1. Electronic signature process (e.g. One time password);

2. Electronic customer due diligence procedure;
3. Disbursement of loan amount, if applicable;
4. Process with e-shops, if applicable.

c. Obligations of Financing companies engaged in Digital financing:

1. Develop and use electronic signature in accordance with

Republic Act No. 8792 (Electronic Commerce Act) to confirm
and execute contracts pertaining to Digital financing services.

2. Conduct customer due diligence through the use of

Information and Communication Technology in accordance
with Republic Act 9160, as amended (Anti-Money Laundering
Act) and its Revised Implementing Rules and Regulations.

3. Ensure the integrity and security of electronic documents

pertaining to Digital financing services under the Republic
Act No. 10173 (Data Privacy Act of 2012).

SECTION 9.Applicability of Bangko Sentral ng Pilipinas Regulations.

The following financing companies, including their Branches, Agencies,

Extension offices, Satellite Offices, or Units, shall be subject to applicable rules and
regulations of the Bangko Sentral ng Pilipinas (BSP) and must comply with BSP
requirements prior to issuance by the Commission of the Certificate of Authority to
Operate, as a Financing Company:

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 a. Financing companies with quasi banking license;

b. Financing companies that are subsidiaries/affiliates of banks;

c. Financing companies that are subsidiaries/affiliates of non-bank financial

intermediaries with quasi-banking license;

d. Financing companies with authority to engage in trust operations;

SECTION 10.Fees

A license fee of 1/10 of 1% of the paid up capital of the financing company shall
be charged for the issuance of a Certificate of Authority to Operate as a Finance
Company.

A license fee of 1/10 of 1% of the capital of the Branch, Agency, Extension

Office, Satellite Office or Unit shall likewise be charged for the issuance of original
Certificate of Authority to each Branch, Agency, Extension Office, Satellite Office or
Unit of a financing company.

A fee of P1,000 for every city (in Metro Manila city or other 1st class cities)
where Off-site location/s are situated.

A fee of P500 for every city (other classes of city) where Off-site location/s are
situated.

A fee of P250 for every municipality where Off-site location/s are situated.

As approved by the Commission, an annual fee of 1/8 of 1% of the required

paid-up capital shall be shall be charged and be paid not later than forty five (45) days
before the anniversary date of the Certificate of Authority to Operate as a Financing
Company and for as long as its license to operate is in effect.

SECTION 11.Loans and Investments. — Unless otherwise authorized by the

Commission:

a. 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%) percent of its
networth.

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b. 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;

c. The total credit that a financing company may extend to its directors,
officers, and stockholders shall not exceed fifteen (15%) percent of its
networth. For purposes of this Section, loans and other credit extended by
a financing company to the following related interests shall be deemed to
have been extended to its directors, officers, and stockholders:

1. Spouse or relatives within the first degree of consanguinity or

affinity, or relatives by legal adoption, of the officer, director or
stockholder of the financing company;

2. Partnerships in which a director or officer or stockholder of the

financing company, or their spouse or relatives referred to in (c) (1 )
of this Section, is a general partner;

3. Corporations where a director or officer or stockholder of the

financing company, or their spouse or relatives referred to in (c) (1)
of this Section, is also a director or officer of the corporation;

4. Corporations where more than twenty (20%) percent of its

subscribed capital stock is owned by a director or officer or
stockholder of the financing company or their spouse or relatives
referred to in (c) (1 ) of this Section;

5. Corporations wholly or majority-owned or controlled by entities

mentioned in (c)(2), (c)(3) and (c)(4) of this Section.

d. The total credit that a financing company may extend to any person,
company, corporation or firm shall not exceed thirty (30%) percent of its
net worth.

e. Unless collected, interest income shall not be recognized on loans and

lease receivables that remain outstanding beyond their maturity dates.

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 f. A 100% allowance for probable losses should be set up for the following:

1. Clean loans and advances past due for a period of more than six (6)
months;

2. Past due loans secured by collateral such as inventories,

receivables, equipment and other chattels that have declined in
value by more than 50% without the borrower offering additional
collateral for the loans;

3. Past due loans secured by real estate mortgage title which is subject
to an adverse claim rendering settlement through foreclosure
doubtful;

4. When the borrower, and his co-maker or guarantor, is insolvent or

where their whereabouts is unknown, or their earning power is
permanently impaired;

5. Accrued interest receivable that remain uncollected after six (6)

months from the maturity date of such loans to which it accrues;

6. Accounts receivable past due for 361 days or more;

SECTION 12.Conveyance of Evidence of Indebtedness and Financed Receivables. —

a. The negotiation, sale or assignment by financing companies of evidence of

indebtedness shall be in accordance with the rules of the Commission on
registration of commercial papers and with the 19-lender limit allowed a
financing company without quasi-banking license pursuant to Republic
Act No. 337.

b. Accounts which have been factored or discounted by, the lease receivables
of, and other evidence of indebtedness (not covered in item a, above)
issued or negotiated to, a financing company shall not be sold, assigned or
transferred in any manner except to banks including their trust accounts,
trust companies, non-bank financial intermediaries authorized to engage
in quasi-banking functions, investment houses including their trust
accounts, financing companies, investment companies, non-stock savings
and loan associations, insurance companies, government financial
institutions, pension and retirement funds approved by the Bureau of
Internal Revenue, educational assistance funds established by the National

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 Government; Provided: That the negotiation of evidence of indebtedness
to pension funds or educational assistance funds shall be on a recourse
basis.

SECTION 13. Required Networth for Operating Financing Companies. — The

company's networth shall be maintained at an amount not less than that required under
Sections 2(b) and 6(c) hereof.

SECTION 14. Prohibitions. —

a. No corporation shall be allowed to include discounting, factoring and

leasing as herein defined as one of its secondary purposes.

b. Unless so authorized under R.A. No. 8556, no person, association,

partnership or corporation shall:

1. Engage in the business of a financing company;

2. Hold itself out to be a financing company, either through

advertisement in whatever form, whether in its stationery,
commercial paper or other document, or through other
representations;

3. Make use of trade or firm name containing the words "Financing"

or "Leasing" or "Finance and Leasing" or "Finance and Investment"
or any other designation that would give the impression that it is
engaged in the business of a financing or leasing company;

SECTION 15. Periodic Reports. — Every financing company shall file with the
Commission, the following reports:

a. Within one hundred twenty (120) days after the end of the fiscal year, four
(4) copies of the audited financial statements;

b. Any change in the membership or composition of the board of directors,

officers from the rank of vice president and up or their equivalent, Branch
manager, cashier and administrative officer shall be reported to the
Commission within seven (7) working days thereafter, and the
requirements prescribed under Section 4(a)(3) and (5) and Section 6(a)(3)

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 and (4) hereof shall be submitted within thirty (30) working days from
date of the aforesaid change;

c. A Semestral report that is in accordance with the prescribed form

approved by the Commission.

d. A Compliance form that shall be submitted in June 1 of the year

following the due date of the submission of the Anti-Money
Laundering Operating Manual (Manual) and every three (3) years
thereafter or as determined by the Commission.

e. Such other reports as the Commission and/or the Bangko Sentral ng

Pilipinas may require.

The reports shall be signed under oath by the company's principal executive
officer and principal financial officer.

SECTION 16. Administrative Sanctions. — If the Commission finds that there is a

violation of R.A. 8556, of these Rules and Regulations, of the terms and conditions of the
Certificate of Authority to Operate as a Financing Company, of any Commission order,
decision or ruling, or the financing company refuses to have its books of accounts
audited, or continuously fails to comply with SEC requirements, the Commission shall,
in its discretion, impose any or all of the following sanctions:

a. Suspension or revocation of the Certificate of Authority to Operate as a

Financing Company after proper notice and hearing;

b. A basic fine of not less than Ten Thousand Pesos (P10,000) and P100 for
each day of continuing violation, but in no case shall the total fine be more
than One Hundred Thousand Pesos (P100,000) per category of violation;

c. Other sanctions within the power of the Commission.

The imposition of the foregoing administrative sanctions shall not preclude the
institution of appropriate action against the officers and directors of the financing
company or any person who might have participated therein, directly or indirectly, in
violation of R.A. 8556 and this Rules and Regulations.

SECTION 17.Cease and Desist Order. — The Commission, after proper

investigation or verification, motu proprio, or upon verified complaint by an aggrieved

19
party, may issue a Cease and Desist Order without the necessity of a prior hearing if in
its judgment the act or practice, unless restrained, may cause grave or irreparable injury
or prejudice to the investing public or may amount to fraud or violation of the
requirements of R.A. 8556 and the rules and regulations of the Commission.

The issuance of such Cease and Desist Order automatically suspends the
authority to operate as a financing company.

Immediately upon the issuance of such Order, the Commission shall furnish the
parties involved with a copy thereof and schedule a hearing not later than fifteen (15)
days after service of notice. The Commission shall, within thirty (30) days upon
submission of the case for resolution, decide on whether to lift the Cease and Desist
Order and/or to impose the administrative sanctions provided for in Section 14.

SECTION 18. Repealing Clause. — These Rules and Regulations supersede the
NEW RULES AND REGULATIONS TO IMPLEMENT THE PROVISIONS OF R.A. 5980
( THE FINANCING COMPANY ACT) AS AMENDED dated October 16, 1991 and the
Rules and Regulations to Implement the Provisions of Republic Act No. 8556 (the
Financing Company Act of 1998) dated May 20, 1999. All other rules, regulations,
orders memorandum circulars of the Commission which are inconsistent herewith are
hereby repealed or modified accordingly.

SECTION 19. Transitory Provision. — Any corporation/partnership which at the

time of the effectivity of these Rules has been registered and licensed by the
Commission to operate as a financing company, shall be considered as registered and
licensed under the provisions of these Rules and shall be governed by the provisions
hereof; Provided, however, that financing companies with existing Certificate of
Authority shall surrender the same to the Commission upon payment of the annual fee
pursuant to Section 10 hereof to be replaced by a New Certificate of Authority and,
Provided, That where such corporation/partnership is affected by the new provisions
hereof, said corporation/partnership shall, unless otherwise herein provided, be given
a period of not more than one (1) year from the effectivity of these Rules within which
to comply with the same.

SECTION 20.Effectivity. — These rules and regulations shall take effect fifteen
(15) days after publication in two (2) newspapers of general circulation in the
Philippines.

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