CBP Memorandum

July 27, 1981 CBP MEMORANDUM TO : All Non-Bank Financial Intermediaries The Monetary Board, in its Resolution No. 705 dated April 24, 1981, approved the following guidelines governing lender count on borrowings or funds mobilized by non-bank financial intermediaries: 1. For purposes of ascertaining the number of lenders/placers to deter mine whether or not a non-bank financial intermediary is engaged in quasi-banking functions, the names of payees on the face of each debt instrument shall serve as the primary basis for counting the lenders/placers except when proof to the contrary is adduced such as the official receipts or documents other than the debt instrument itself. In such case the actual/real lenders/placers as appearing in such proof, shall be the basis for counting the number of lenders/placers. In a debt instrument issued to two (2) or more named payees under an "and/or" and "or" arrangement, the number of payees appearing on the instrument shall be the basis for counting the number of lenders/placers: Provided, however , That a debt instrument issued in the name of a husband and wife followed by the word "spouses", whether under an "and" , "and/or" or "or" arrangement or in the name of a designated payee under an "in trust for" (ITF) arrangement, shall be counted as one borrowing/placement. 2. Each debt instrument payable to bearer, shall be counted as one lender/placer, except when the non-bank financial intermediary can prove that there is only one owner for several debt instruments so payable. 3. Two or more debt instruments issued to the same payee, irrespective of the date and amount shall be counted as one borrowing or placement. 4. Debt instruments underwritten by investment houses or traded by securities dealers/brokers whether on a firm, standby or best efforts basis shall be counted on the basis of the number of purchasers thereof and shall not be treated as having been issued solely to the underwriter or trader: Provided, however , That in case of unsold debt instruments in a firm commitment underwriting, the underwriter shall be counted as a lender. 5. Each buyer, assignee, and/or indorsee shall be counted in determining the number of lenders/placers of funds mobilized through sale, assignment, and/or indorsement of securities, or receivables on a "without recourse" basis, whenever the terms and/or attendant documentation, practice, or circumstances indicate that the sale, assignment, and/or indorsement thereof legally obligates the non-bank financial intermediary to repurchase or reacquire the securities/receivables sold, assigned, indorsed or to pay the buyer, assignee, or indorsee at some subsequent time. 6. Funds obtained by way of advances from stockholders, directors, or officers, regardless of nature, shall be considered borrowed funds or funds mobilized and such stockholders, directors or officers shall be counted in determining the number of lenders/placers. (SGD.) JAIME C. LAYA Governor