VERIFYING SEC REGISTRATION OF LENDING COMPANIES IN THE PHILIPPINES A comprehensive legal guide for consumers, compliance officers, and practitioners
1. Statutory and Regulatory Framework
| Instrument | Key Provisions Relevant to Verification |
|---|---|
| Republic Act (RA) 9474 – “Lending Company Regulation Act of 2007” | · Defines a lending company (LC) as a corporation primarily engaged in granting loans from its own capital. · Requires every LC to secure (a) a Certificate of Incorporation and (b) a Certificate of Authority (CA) from the Securities and Exchange Commission (SEC) before it can start operations ( §4 ). · Imposes administrative, civil, and criminal penalties for operating without a CA ( §12 ). |
| 2010 Implementing Rules and Regulations (IRR) of RA 9474 | · Expands documentary requirements for a CA. · Mandates publication of the CA in two newspapers within 30 days of issuance. · Directs the SEC to maintain publicly available lists of LCs with valid CAs. |
| Republic Act 11232 – Revised Corporation Code (2019) | · Requires every domestic corporation to be registered with the SEC through the Company Registration System (CRS) or its successor, eSPARC. · Provides the SEC with broad visitorial powers to inspect corporate books and issue cease-and-desist orders (CDOs). |
| Republic Act 8556 – Financing Company Act of 1998 | · Distinguishes a financing company (FC) from an LC (higher minimum capital, wider authority to extend credit). Verification steps are almost identical; the SEC issues a separate CA for FCs. |
| Special Laws & Circulars | · Anti-Usury Law still suspended but interest-rate disclosures required by BSP Circular 730 and Truth in Lending Act (RA 3765). · Data Privacy Act (RA 10173) and BSP-NPC-SEC Joint Memorandum Circular 2021-01 regulate collection of personal data by online lending apps (OLAs). |
2. Why Verification Matters
- Legality of the loan agreement. Contracts with an unlicensed LC can be declared void for being in pari delicto with RA 9474.
- Consumer protection. Registered entities must disclose effective interest rates, fees, and complaint mechanisms.
- Enforcement risk. Unregistered lenders face SEC CDOs, asset freezes, and criminal prosecution; borrowers may be harassed by illegal collection practices.
- Tax and AML compliance. Only registered entities can obtain Tax Identification Numbers (TINs), submit Anti-Money Laundering Council (AMLC) reports, and issue Bureau of Internal Revenue (BIR)-compliant receipts.
3. Corporate Registration vs. Authority to Operate
| Requirement | Corporate Incorporation | Certificate of Authority (CA) |
|---|---|---|
| Issued by | SEC Company Registration & Monitoring Department | SEC Corporate Governance & Finance Department – Lending & Financing Division |
| Legal basis | §14, RA 11232 | §4, RA 9474 |
| Timing | Before legal personality arises | After incorporation but before engaging in lending |
| Minimum paid-up capital | ₱1 million (LC); ₱10 million (FC) – may be higher under SEC Guidelines | Same as above; must be fully subscribed and at least 25 % paid upon application |
| Renewal/Validity | Perpetual (unless limited by Articles of Incorporation) | Indefinite but automatically revoked if the LC/FC fails to operate within 120 days or becomes dormant for > 180 days |
Always verify both the SEC Registration Number and the CA Number.
4. Where and How to Verify
Although interfaces evolve, the underlying data sources remain constant. Any thorough due-diligence checklist should cover four distinct points of inquiry:
SEC “Express” or eSPARC Public Search Purpose: Confirms corporate existence (Articles of Incorporation, status: active/suspended/dissolved). How:
- Access the SEC CRS/eSPARC portal.
- Enter the exact corporate name or registration number.
- Download the Certificate of Incorporation and the latest General Information Sheet (GIS), which names directors and shows status.
Official List of Lending & Financing Companies with Valid CAs Purpose: Establishes valid authority to operate as an LC or FC. How:
- Navigate to sec.gov.ph → Regulated Entities → Financing & Lending Companies.
- Download the latest PDF or Excel list. These lists show: company name, SEC Reg. No., CA No., date of issuance, and address.
- Cross-check that the CA is still “Active”.
SEC i-View / Document Request System (DRS) Purpose: Retrieves primary (Articles, By-laws) and secondary (Audited Financial Statements, GIS) filings to confirm ongoing compliance. How:
- Request the GIS and latest Audited FS.
- Verify that the industry classification is “LENDING COMPANY” or “FINANCING COMPANY” and that paid-up capital meets statutory minimums.
Cease-and-Desist Orders, Revocation Advisories, and Name-and-Shame Lists Purpose: Detect entities under investigation or already shut down. How:
- Check SEC Press Release and Advisory section.
- Search for the company’s name or its online lending app brand.
- Review the disposition (e.g., CDO dated 20 June 2024; Revocation Order dated 15 April 2025).
Tip: Many unlicensed lenders use a different corporate name from their app. Always locate the developer details in the Google Play/App Store listing (“Offered By”), then run that legal name through the four-step search above.
5. Step-by-Step Verification Workflow (Practical Guide)
Gather identifiers
- Corporate name (as spelled in contracts/app).
- Business/address.
- SEC Registration or CA number if provided.
Check corporate existence (SEC eSPARC or CRS).
- Status must be Active.
- Primary purpose should reference lending or financing.
Validate the CA
- Find the company in the most recent SEC list.
- Confirm CA number matches.
- Ensure the CA is neither “Revoked” nor “Expired”.
Review compliance filings
- Obtain the latest GIS to inspect ownership (foreign equity cannot exceed 49 %).
- Verify board/director nationality per constitutional limits on lending activities.
- Check that annual financial statements have been filed on time (within 120 days of fiscal year-end).
Search for enforcement actions
- Look up SEC advisories and CDOs.
- Check the National Privacy Commission (NPC) and Bangko Sentral ng Pilipinas (BSP) for parallel enforcement bulletins on data-privacy or interest-rate violations.
Document the findings
- Keep screenshots of search results.
- Request certified true copies (CTCs) if evidence is needed for litigation.
6. Red Flags & Common Pitfalls
| Red Flag | Explanation | Recommended Action |
|---|---|---|
| No CA in SEC list | Entity may exist but never secured authority to lend. | Treat as unlicensed. Report to SEC Enforcement and Investor Protection Department (EIPD). |
| Corporate status: “Suspended” or “Revoked” | Failure to file reports, tax delinquency, or SEC sanctions. | Verify cause; avoid transacting until reinstated. |
| Mismatch between app developer and registered name | Shell entities or trademark licensing ruse. | Require board resolution linking the two; otherwise, disengage. |
| Aggressive collection tactics / data scraping | Often characteristic of illegal OLAs. | File parallel complaints with SEC, NPC, and NBI-Cybercrime Division. |
| Foreign-only directors/stockholders (> 49 %) | Violates §11 RA 9474 on foreign ownership ceiling. | Likely void CA; SEC may already be probing. |
7. Penalties for Unregistered Lending Activity
Administrative:
- Fines of ₱10,000 – ₱50,000 per violation plus ₱100 per day of continuing offense (RA 9474 §12).
Criminal:
- Imprisonment of 6 months to 10 years.
- Courts have discretion to double the maximum penalty when large-scale fraud is proven.
Ancillary Sanctions:
- Asset freeze, disgorgement of profits, cancellation of permits, and delisting from app stores.
Borrowers retain the right to recover payments in excess of the principal under Article 1411 of the Civil Code when the contract is void for illegality.
8. Best-Practice Checklist for Compliance Officers & Institutional Investors
- Verify quarterly, not just at onboarding.
- Require a CA “bringdown” certificate when renewing credit-line agreements.
- Embed an early-warning indicator: automated scrape of SEC advisory feeds.
- Mandate covenant to maintain capital adequacy ratios above statutory minimum.
- Include a walk-away clause if SEC issues a CDO or revocation order.
9. Filing a Complaint or Seeking Clarification
| Agency | Jurisdiction | Contact/Action |
|---|---|---|
| SEC Enforcement and Investor Protection Department (EIPD) | Unregistered lending, false advertising, investor fraud | File a sworn complaint with evidence; EIPD may issue a CDO within 72 hours. |
| National Privacy Commission (NPC) | Unauthorized data scraping, harassment via contacts | Online complaint portal; NPC can recommend delisting of app. |
| Bangko Sentral ng Pilipinas (BSP) | If lender is a BSP-supervised FC or bank subsidiary | Use BSP Online Buddy (BOB) to file complaints. |
| National Bureau of Investigation – Anti-Cybercrime Division | Criminal prosecution for threats, doxxing, libel | Execute an affidavit, provide screenshots and call logs. |
10. Conclusion
Verifying the SEC registration and Certificate of Authority of a lending company in the Philippines is neither optional nor complicated. A systematic approach—checking corporate existence, CA validity, compliance filings, and enforcement history—protects borrowers, investors, and counterparties alike. Given the surge of online lending apps and the SEC’s aggressive enforcement posture since 2019, due diligence must be continuous. By anchoring transactions on verifiable SEC data, parties can avoid void contracts, crippling penalties, and reputational harm.
Prepared 18 May 2025 | This article is for informational purposes only and does not constitute legal advice. For specific queries, consult a Philippine lawyer or the Securities and Exchange Commission directly.