SEC Verification of Lending Company Legitimacy in the Philippines
A comprehensive legal guide for borrowers, investors, compliance officers and counsel
1. Regulatory Landscape
| Key Law / Issuance | Core Subject | Year | Principal Regulator |
|---|---|---|---|
| Republic Act No. 9474 — Lending Company Regulation Act | Establishes licensing, capital, nationality limits, penal provisions | 2007 | Securities and Exchange Commission (SEC) |
| SEC Memorandum Circular (MC) No. 19-2009 | Implementing Rules & Regulations (IRR) of RA 9474 | 2009 | SEC Corporate Governance & Finance Department |
| SEC MC No. 18-2019 | Registration & reportage rules for Online Lending Platforms (OLPs) | 2019 | SEC Financing & Lending Division (FLD) |
| SEC MC No. 7-2020 | Moratorium & disclosure rules on unfair collection practices | 2020 | SEC Enforcement and Investor Protection Dept. (EIPD) |
| SEC MC No. 10-2021 | Additional fintech-focused “Know-Your-Borrower” & cybersecurity controls | 2021 | SEC PhilFintech Innovation Office |
| BSP Circular No. 1133-2021 (for reference) | Credit scoring & data privacy guidance (applies when lenders partner with banks) | 2021 | Bangko Sentral ng Pilipinas |
Tip: Financing Companies are registered under RA No. 5980 (as amended by RA 8556); the verification mechanics are almost identical but capital requirements are higher (₱10 million vs. ₱1 million for lending companies).
2. Licensing Prerequisites for Lending Companies
SEC Certificate of Incorporation (COI). Organized strictly as a stock corporation; at least 25 % of the authorized capital stock (ACS) must be subscribed and 25 % of that subscription must be paid-up, but never less than ₱1 million (§4 RA 9474).
Certificate of Authority (CA) to Operate as a Lending Company. Issued only after documentary compliance and on-site pre-licensing audit. The CA number is separate from the SEC “Company Reg. No.”
Foreign Ownership Cap — 49 %. At least 51 % of the voting stock must be Filipino-owned (Art. XII §11, 1987 Constitution; §4 RA 9474).
Fit-and-Proper Test for Directors & Officers. Disqualification mirrors BSP’s criteria (convictions, insolvency, unsound business practices, etc.).
Paid-up Capital Upkeep. Must be unimpaired throughout the life of the company (MC 19-2009, Rule 5).
3. How the Public Can Verify Legitimacy
| Verification Method | What You’ll Find | How to Access |
|---|---|---|
| SEC Company Registration System (CRS) / “SEC CheckApp” | COI status, company profile, CA status | iOS/Android app or https://crs.sec.gov.ph |
| SEC “List of Registered Lending Companies” | Quarterly-updated spreadsheet showing active, suspended, or revoked CA | “Monitoring & Advisories” section, SEC website |
| EIPD Advisories Page | Names of entities issued Cease-and-Desist Orders (CDOs) for unlicensed lending | SEC home → Advisories |
| Ocular inspection of CA | Original hard copy should have QR code, dry SEAL, and Director’s signature | Displayed in principal place of business (§6 RA 9474) |
| General Information Sheet (GIS) filings | Shareholders, beneficial owners, officers | Order copy via SEC Express System |
Red Flag Checklist • No CA number (or just a “virtual” reg. no.) • Company name contains “Lending Investor,” “Micro-finance,” etc. without SEC registration • Interest exceeds 6 % per month (often violates Truth in Lending Act & BSP ceilings) • Mobile app not included in SEC’s registry of approved OLPs • Collects blank ATM cards, IDs, or passwords — prima facie evidence of unfair collection under MC 7-2020.
4. Reporting & Ongoing Compliance Obligations
- Annual Audited Financial Statements (AFS) & GIS — due every 30 April.
- Quarterly Reports on Lending Operations — volume, effective interest rate, complaints received.
- Interest Rate & Fee Disclosure — promissory notes must follow DOF-BSP-SEC Joint Memo (2019).
- Data Privacy Compliance — registration with NPC & privacy impact assessments for apps.
- Consumer Protection Unit — designate compliance officer, hot-line, 15-day resolution window.
- Cyber-incident Reporting — notify SEC PhilFintech within 24 hours of breach.
5. Investigations, Sanctions & Remedies
| Violation | Statutory Basis | Penalty |
|---|---|---|
| Operating without a CA | §12 RA 9474 | Fine ₱10 000 – ₱50 000 and/or imprisonment 6 mos – 10 yrs |
| False statements in applications | §13 RA 9474 | Same range of fines & imprisonment |
| Unfair or abusive collection | MC 7-2020; Consumer Act §§168-169 | Suspension or revocation of CA; administrative fines up to ₱1 million per count |
| Usurious interest (above ceilings set by BSP/DOF) | Art. 1956 Civil Code; DOF Order #116-2003 | Void interest stipulation; borrower pays only principal |
| Non-filing of AFS/GIS | MSC Rules §142 | Administrative fines ₱1 000 – ₱20 000 per form, plus daily penalties |
| Cyber-security lapses causing data leak | Data Privacy Act §25 | Fine up to ₱5 million and imprisonment 1–6 yrs; SEC may impose separate sanctions |
Borrower Remedies
- File complaint with SEC EIPD (email: epd@sec.gov.ph) – fastest track for CDOs.
- File civil action for annulment of loan or refund of usurious interest; may plead for TRO on collections.
- Coordinate with NPC for privacy violations; with BSP-FCPD when banks are involved.
- Report to National Privacy Commission’s Online Lending Task Force for “shaming” or harassment campaigns.
6. Recent Trends & Jurisprudence
| Case / Resolution | Gist | Take-away |
|---|---|---|
| SEC En Banc Res. No. 398-2023 (FastCash Lending) | Upheld revocation of CA where OLP collected excessive permissions (contacts, photos) and stalked borrowers | Confirmed that data over-collection is “unfair practice” even if interest rates were lawful |
| People v. Rjay Lending Corp. (RTC-Manila, 2022) | First criminal conviction under §12 RA 9474; owners jailed 2 yrs, fined ₱500 k | Demonstrates prosecutorial appetite; mere advertising loans enough to prove “operation” |
| SEC Advisory re: “P2P Pocket Investors,” Feb 2024 | Warned public of Ponzi disguised as lending | SEC now sweeps social-media “investment-lending hybrids” monthly |
7. Step-by-Step Verification Flow (for Practitioners)
Gather Details – company name, advertised CA & SEC numbers, app name, physical address.
Search SEC CheckApp – confirm COI and CA (“Active” status).
Cross-reference SEC Lists:
- Registered Lending Companies
- Financing Companies (if capital ≥ ₱10 M)
- Revoked/Suspended Entities
Download Latest GIS & AFS – confirm capital, Filipino ownership, authorized activities.
Review App Permissions – compare with SEC MC 18-2019 Annex “Privacy Matrix.”
Spot-check Disclosure Documents – ensure standardized Disclosure Statement on Loan/Credit Transaction per RA 3765 (Truth in Lending).
Validate CA Authenticity – QR code should resolve to SEC database; inspect hologram seal.
Document Screenshots / Contracts – critical if filing a complaint.
Escalate – file to SEC EIPD or NPC as needed.
8. Best-Practice Compliance Tips for Lending Companies
| Area | Recommended Action |
|---|---|
| Governance | Create board-level Risk & Compliance Committee; minutes must include lending metrics |
| Consumer Protection | Adopt BSP-style Cooling-Off Period (at least 24 hrs before first disbursement) |
| IT Security | Annual ISO 27001 audit; mandatory vulnerability scan after each mobile-app update |
| AML/CTF | Enroll with AMLC as covered person if loan proceeds sourced from or remitted via banks/e-wallets |
| ESG & Sustainability | Offer “green micro-loan” products; include sustainability KPIs in AFS footnotes |
9. Take-aways
In the Philippines, a lending company’s mere SEC incorporation is not sufficient; a separate Certificate of Authority is the decisive badge of legitimacy. Borrowers and investors should verify both documents through multiple SEC channels, assess compliance with disclosure and collection rules, and stay alert to SEC advisories. Operating without a CA—or breaching the ever-tightening rules on digital lending—now carries heavy fines, criminal liability, and reputational ruin.
Authored by: [Your Name], Philippine corporate & financial-services lawyer Date: 7 July 2025