Single Borrower Limit (SBL) and Credit Limit on Directors, Officers, Stockholders and Related Interests (DOSRI)

April 8, 2013 SEC MEMORANDUM CIRCULAR NO. 7, S. 2013 TO : Lending Companies SUBJECT : Single Borrower Limit (SBL) and Credit Limit on Directors, Officers, Stockholders and Related Interests (DOSRI) The Commission En Banc, in its meeting on 08 April 2013, approved the amendment of Rule 3 of the Implementing Rules and Regulations of the Lending Company Act of 2007 (Republic Act No. 9474) by requiring lending companies to comply with the Single Borrower Limit (SBL) and credit limit on directors, officers, stockholders and related interests (DOSRI). Accordingly, the said Rule is hereby amended as follows: DEacIT " RULE 3. Requirements for Organization (a) Form of Organization xxx xxx xxx (h) The total credit that a lending company may extend to its directors, officers and stockholders shall not exceed fifteen percent (15%) of its net worth. For this purpose, loans and other credit extended by a lending company to the following related interests shall be deemed extended to its directors, officers and stockholders: i. Spouse or relatives within the first degree of consanguinity or affinity, or relatives by legal adoption, of the officer, director or stockholder of the lending company; ii. Partnership in which a director or officer or stockholder of the lending company, or their spouse or relatives referred to in the preceding item (item i) is a general partner; iii. Corporations where a director or officer or stockholder of the lending company, or their spouse or relatives referred to in item i above is also a director or officer of the corporation; iv. Corporations where more than twenty percent (20%) of its subscribed capital stock is owned by a director or officer or stockholder of the lending company or their spouse or relatives referred to in item i above; v. Corporations wholly or majority-owned or controlled by entities mentioned in items ii, iii and iv above. (i) The total credit that a lending company may extend to any person, company, corporation or firm shall not exceed thirty percent (30%) of its net worth." The penalties for violations of the aforesaid requirements shall be as provided below: Violation 1st Offense 2nd Offense 3rd Offense 4th Offense Total credit P10,000.00 plus P10,000.00 plus P10,000.00 Suspension extended to P100.00 per P200.00 per day plus P300.00 and/or revocation the company's day per day of Certificate of directors, Authority after officers, due notice/ stockholders proceedings and related interests (DOSRI) exceeds 15% of the company's net worth Total credit P10,000.00 plus P10,000.00 plus P10,000.00 Suspension extended to any P100.00 per P200.00 per day plus P300.00 and/or revocation person, whether day per day of Certificate of individual, Authority after partnership or due notice/ corporation proceedings (Single Borrower Limit) exceeds 30% of the company's net worth This Memorandum Circular shall be published in two (2) newspapers of general circulation in the Philippines and shall take effect fifteen (15) days after the date of such publication. HESAIT Issued this 8th of April 2013, Mandaluyong City, Philippines. For the Commission: (SGD.) TERESITA J. HERBOSA Chairperson Securities and Exchange Commission