Scale of Penalties for Lending Companies

November 12, 2010 SEC MEMORANDUM CIRCULAR NO. 09-10 TO : Lending Companies SUBJECT : Scale of Penalties for Lending Companies Pursuant to the authority granted under Section 9 of the Lending Company Regulation Act of 2007 (R.A. No. 9474) and Rule 8 (c) of its Implementing Rules and Regulations (IRR), the Commission in its Resolution No. 473, s. of 2010 adopted during its meeting on October 14, 2010, approved the Schedule of Penalties set forth below for violation/s of the provisions of the law and its IRR. Provisions Description 1st Offense 2nd Offense 3rd Offense 4th Offense of R.A. No. 9474 and its IRR Sec. 4; Operating a Lending PhP10,000.00 For blacklisting N/A N/A Rule 3 Company Head Office plus and revocation of without a Certificate of PhP100.00 primary franchise Authority from SEC daily penalty (for continuous non-compliance) Sec. 4; Operating a Branch, PhP10,000.00 PhP10,000.00 Suspension Revocation Rule 3 Extension, Satellite or plus PhP100.00 plus PhP100.00 of CA of Head of CA of Head Unit Office without a daily penalty daily penalty Office Office Certificate of Authority from SEC Sec. 9; Failure to commence Suspension SUSPENSION/REVOCATION OF CA Rule 3 operation within 120 of CA (for continuous non-compliance) days from the date of grant of CA Sec. 9; Investment in real Reprimand PhP10,000.00 Suspension Revocation Rule 3 estate and in shares plus PhP100.00 of CA of CA of stock in real estate daily penalty development corporation and other real estate-based projects exceeding 25% of the company's net worth Sec. 9; Lending of less than Reprimand PhP10,000.00 Suspension Revocation Rule 3 51% of the company's plus PhP100.00 of CA of CA funds daily penalty Sec. 9; Late payment of Reprimand PhP10,000.00 Suspension Revocation Rule 3 annual fee plus PhP100.00 of CA of CA daily penalty Sec. 12; Misrepresentation Reprimand PhP10,000.00 Suspension Revocation Rule 10 or misleading plus PhP100.00 of CA of CA statement/s on daily penalty material facts in any application for, personal information sheet, reports, and other documents required to be submitted to the Commission (other than AFS and Interim FS) Sec. 5; Failure to comply with Reprimand PhP10,000.00 Suspension Revocation Rule 4 the required capital plus PhP100.00 of CA of CA daily penalty Sec. 7; Failure to furnish a Reprimand PhP10,000.00 Suspension Revocation Rule 6 debtor with a plus PhP100.00 of CA of CA disclosure statement daily penalty per client Late submission of the following reports Sec. 9; Special Form of Reprimand PhP10,000.00 Suspension Revocation Rule 8 Financial Statements plus PhP100.00 of CA of CA daily penalty Semi-Annual Financial Reprimand PhP10,000.00 Suspension Revocation Statements plus PhP100.00 of CA of CA daily penalty The suspension of the company's secondary license as a lending company, after notice and hearing, shall generally be for a period of sixty (60) days from the date of receipt of the Order of Suspension, unless otherwise provided. The administrative penalties are without prejudice to the institution of criminal actions against responsible officers and directors for violation of Sec. 12 of R.A. No. 9474. This Memorandum Circular shall be published in two (2) newspapers of general circulation in the Philippines and shall take effect within fifteen (15) days after the date of the last publication. Issued this 12th day of November 2010, Mandaluyong City, Philippines. For the Commission: (SGD.) FE B. BARIN Chairperson Published in The Philippine Star and The Manila Standard Today on November 18, 2010.