Writing on Lending Company Verification

The user has asked for a detailed legal article on verifying the legitimacy of lending companies with the SEC in the Philippines. Since I can't browse, I'll rely on my internal knowledge. To address this:

I’ll define lending companies under the Lending Company Regulation Act of 2007.
I’ll explain the role of the SEC.
I'll cover registration requirements such as incorporation, minimum capital, and certificate of authority.
I need to distinguish lending companies from others (e.g., pawnshops, microfinance NGOs).
I’ll mention relevant SEC regulations and memoranda.

Guidance on Verifying Lending Company Legitimacy

To verify a lending company's legitimacy, check if it's registered with the SEC using systems like CRS or the Express System. Required info includes company name, SEC registration number, and certificate of authority (CA). Additional steps involve checking business permits, and ensuring compliance with the Data Privacy Act. For enforcement, the SEC can issue fines, close businesses, and revoke licenses. Consumers should carefully read loan agreements for transparency regarding interest rates and penalties. Complaints can be filed with SEC or the National Privacy Commission.

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Lending Company Legitimacy Verification with the SEC (Philippines)

A practical, lawyer-style explainer for consumers, founders, and compliance officers

1 Why legitimacy checks matter

Unregistered “5-6” lenders, clone firms, and rogue online-loan apps (OLAs) can charge ruinous interest, harvest personal data, and engage in shaming collection tactics. Because the Philippines has no usury ceiling (the old Usury Law was effectively repealed in 1983), our main consumer guardrails are:

Republic Act (RA) 9474 – Lending Company Regulation Act of 2007 (LCRA)
SEC regulations – Issued under its quasi-judicial powers
RA 11765 – Financial Products and Services Consumer Protection Act (FPSCPA, 2022)
BSP Circular No. 1133 (2021) – caps interest/charges on small-value, short-term consumer loans at 6 % per month

Knowing whether a lender holds a valid Certificate of Authority (CA) from the SEC is therefore the single best first-line test of legitimacy.

2 Legal taxonomy of credit providers

Category	Primary Law	Regulator	Key capital rule	Typical products
Lending Company (LC)	RA 9474	SEC	₱1 M paid-up for first branch; +₱1 M / additional branch	Salary loans, appliance loans, OLAs
Financing Company (FC)	RA 8556	SEC	₱10 M minimum; higher for nationwide	Vehicle, equipment financing
Microfinance NGO	RA 10693	SEC & DSWD	Surplus-limitation; no dividends	Micro-enterprise loans
Pawnshop	PD 114 / BSP Circulars	Bangko Sentral ng Pilipinas (BSP)	Varies by branch; bonding	Short-term pawns, remittance
Banks & thrift banks	Various BSP circulars	BSP	Tiered	Deposits, credit cards, etc.

Only lending companies are covered in this article.

3 How a lending company becomes lawful

Incorporate at the SEC – Must be a stock corporation with “Lending Company” or “Lending Investor” in its name.
Minimum Filipino ownership – At least 51 % of voting shares (foreign participation is capped at 49 %).
Pay ₱1 M paid-up capital – plus an additional ₱1 M for every branch outside the principal office.
Apply for a Certificate of Authority – Issued by the SEC Corporate Governance & Finance Department (CGFD). No CA = no business.
Register each Online Lending Platform/App – SEC Memorandum Circular (MC) No. 19-2019 requires separate registration and disclosure of the app name, website, and data-privacy protocols.
Display registration details – RA 9474 Sec. 5(b) obliges lenders to show their SEC Reg. No. and CA No. on all marketing, contracts, receipts, websites, and apps.

Failure at any step places the company on the SEC’s “Unregistered” or “Revoked CA” advisories list.

4 Step-by-step legitimacy verification

4.1 Collect the basic identifiers

Exact corporate name (not just a trade name)
SEC Registration Number (e.g., CS2023-12345)
Certificate of Authority Number (e.g., 3056)

Tip: For OLAs, scroll to the bottom of the app’s Google Play listing or login screen—MC 19-2019 forces them to put these numbers there.

4.2 Search the SEC databases (all free)

Tool	What it shows	How to access
SEC CheckApp (mobile)	Registration & CA status, public advisories	Download from Google Play / App Store
SEC Express System	PDF copies of Articles, By-laws, CA	`expressonline.sec.gov.ph`
Company Registration System (CRS)	Live status of corporations	`crs.sec.gov.ph` > Search
SEC Advisories	Lists of firms with revoked CAs or cease-and-desist orders (CDOs)	`sec.gov.ph/advisories`

A “Registered – CA Valid” or “Active” result means the company is legitimate as of the query date. Anything else (“Revoked”, “Expired”, “No record”) is a red flag.

4.3 Cross-check other regulators (if needed)

National Privacy Commission (NPC) – Verify the lender’s Data-Privacy Registration No.
Bangko Sentral – If the lender also offers e-wallet or remittance services.
Local Government Unit (LGU) – Business permit and barangay clearance.

4.4 Double-check interest caps and disclosures

Under BSP Circular 1133, salary-secured, general-purpose loans ≤ ₱10,000 and tenor ≤ 4 months may not exceed:

Interest/discount: 6 % per month
Processing fee: ₱500 maximum Lending companies must comply even though BSP is not their primary regulator, because the SEC adopted the same ceiling in MC No. 3-2022.

Moreover, the Truth in Lending Act (RA 3765) obliges them to disclose the Annual Percentage Rate (APR), penalties, and all charges in pesos and percentages before loan signing.

5 Red-flag indicators of an illegal lender

Red flag	Regulatory breach
No SEC Reg. No. or CA on website/app	RA 9474 Sec. 5(b); MC 19-2019
Intimidating collection texts / social-media “doxxing”	SEC MC 18-2019 (Prohibition of Unfair Collection Practices)
Asking for your entire phone contact list	NPC Circular 16-01 (Data minimization)
Interest quoted at “20-30 %” without disclosing tenure	RA 3765 & BSP Circular 1133 caps
Foreign-owned 100 % lender	RA 9474 Sec. 5 (ownership cap)
CA status shows “Revoked”	Must cease operations; lending is criminal if continued

6 How to complain or report

Document everything – screenshots, contracts, receipts, abusive messages.
File with the SEC’s Enforcement and Investor Protection Department (EIPD)
- Email: epd@sec.gov.ph
- Attach the evidence and sworn statement.
Escalate to NPC (if privacy was violated) – complaints@privacy.gov.ph
BSP Consumer Protection & Market Conduct Office – if the lender masquerades as an EMI or bank.
PNP-ACG or NBI-CCD – for cyber-harassment and threats.

Penalties under RA 9474: fine of ₱10,000 – ₱50,000 and/or 6 months – 10 years’ imprisonment. For corporations, directors/officers are personally liable (Sec. 13, RA 9474).

7 FAQs

Q: Can a sole proprietorship be a lending company? No. RA 9474 requires a stock corporation structure.

Q: Does holding a DTI business name or mayor’s permit make a lender legal? No. Those are local or trade-name clearances. The non-negotiable requirement is an SEC CA.

Q: Are online pawn apps covered by RA 9474? No; pawnshops fall under BSP and PD 114.

Q: What about peer-to-peer (P2P) loan platforms? If the platform itself extends credit from its own balance sheet, it must register as a lending or financing company. Otherwise, it must register as a crowdfunding intermediary or Market Place under SEC Rules depending on its model.

8 For founders and compliance officers

Prepare General Information Sheet (GIS) updates annually; non-filing can lead to CA suspension.
File Audited Financial Statements within 120 days after fiscal year-end (SEC MC No. 6-2006).
Maintain Risk Management and Compliance Manuals—the SEC now asks for these during spot audits.
For OLAs, observe SEC MC 10-2021: mandatory appellate mechanism for borrower complaints and a 60-day data retention policy.
Implement FPSCPA “treat customers fairly” rules—effective May 2024; SEC will issue detailed IRR applicable to LCs.

9 Key statutes & regulations (chronological)

Year	Citation	Title / Subject
2007	RA 9474	Lending Company Regulation Act
2013	SEC MC 6-2013	Reduces paid-up capital to ₱1 M/branch
2019	SEC MC 18-2019	Unfair Collection Practices ban
2019	SEC MC 19-2019	Registration of Online Lending Platforms
2021	BSP Circular 1133	6 %/month cap on small consumer loans
2021	SEC MC 10-2021	Complaints handling & data retention for OLAs
2022	RA 11765	Financial Products and Services Consumer Protection Act
2022	SEC MC 3-2022	Mirrors BSP interest-rate cap for LCs
2024	Draft IRR on FPSCPA (pending)	Will impose suitability tests & cooling-off periods

10 Practical verification checklist (printable)

☐ Capture the lender’s exact corporate name, Reg. No., CA No.
☐ Search SEC CheckApp / CRS – status shows “Active”.
☐ Confirm the CA has not been revoked (Advisories list).
☐ For an OLA, verify the app name appears in the SEC-published “Registered OLAs” spreadsheet.
☐ Review interest/fees—should not breach 6 %/month + ₱500 processing cap (where applicable).
☐ Read the full loan agreement and APR disclosure (RA 3765).
☐ Ensure no excessive permissions (contact list, gallery) are required.
☐ Keep screenshots and e-receipts.
☐ If anything is off, walk away and report to SEC EIPD.

11 Conclusion

The SEC’s Certificate of Authority is the litmus test of a lending company’s legality in the Philippines. Verifying that single document—now just a few taps away via the SEC CheckApp—can shield borrowers from predatory interest, data-mining, and humiliating collection. For entrepreneurs, strict compliance is equally vital: the Commission has become far more aggressive since 2019, routinely issuing cease-and-desist orders, app takedowns, and criminal referrals.

Stay vigilant, use the tools above, and if in doubt, consult a Philippine-qualified lawyer or the SEC’s helpdesk before signing or downloading anything.

This article is for general information only and does not constitute legal advice. As regulations evolve, always confirm the current rules or seek professional counsel.