Verifying the SEC Registration of a Lending Corporation in the Philippines
A comprehensive legal guide
1. Why verification matters
Operating a “lending company” without the proper authority is a criminal offense in the Philippines. Borrowers who deal with unregistered entities lose the benefit of regulatory caps on interest and collection practices, while lenders and their officers face fines, imprisonment, and perpetual disqualification from corporate office. Hence, due diligence—beginning with SEC verification—is indispensable.
2. Governing statutes & regulations
| Instrument | Key Provisions Relevant to Verification |
|---|---|
| Republic Act No. 9474 (Lending Company Regulation Act of 2007, “LCRA”) | • A lending company must (a) be organized as a stock corporation and (b) secure a Certificate of Authority to Operate (CA) separate from its Certificate of Incorporation (Sec. 4). • Operating without a CA is punishable by ₱10,000 – ₱50,000 and/or 6 months – 10 years’ imprisonment (Sec. 12). |
| SEC LCRA Implementing Rules & Regulations (IRR, 2010; amended 2013, 2019, 2022) | • Minimum paid-up capital: ₱1 million. • Foreign ownership ceiling: maximum 49 % of outstanding voting shares. |
| SEC Memorandum Circulars (MCs) | • MC No. 19 - 2019: Annual submission of Disclosure Statement on Lending and Financing Companies. • MC No. 18 - 2019 & MC No. 7 - 2022: Moratorium and subsequent guidelines for Online Lending Platforms (OLPs). |
| RA 3765 (Truth in Lending Act), RA 10173 (Data Privacy Act), BSP-SEC Joint Memo Circulars | Impose disclosure, privacy, and consumer-protection duties—useful red-flag criteria when verifying legitimacy. |
3. Basic registration architecture
Certificate of Incorporation (CI). Issued by the SEC Company Registration & Monitoring Department (CRMD). – Confirms that the entity exists as a stock corporation.
Certificate of Authority (CA). Issued by the SEC Corporate Governance & Finance Department (CGFD). – Grants the right to conduct lending business.
– Valid until revoked; annotated when renewed or amended.
Both documents must be present. A corporation with a CI but no CA cannot legally lend.
4. How to verify—step-by-step
| Step | What to Do | Evidence You Should See | Practical Tips |
|---|---|---|---|
| 1. Company name search | Use the SEC “Company Registration System” (CRS) or SEC i-view public portal. | • Exact corporate name, SEC Registration No., date of incorporation, status (“active”, “suspended”, etc.). | Spelling matters—variants or trade names won’t always appear. |
| 2. Request copies of the CI & CA | Ask the lender for photocopies or scanned PDFs. | • CI signed by the SEC Commissioner/Director. • CA stating “This authority is granted pursuant to RA 9474…”. |
Look for dry seal or QR code. Digital CAs (2021-present) carry a unique hash. |
| 3. Cross-check CA issuance | E-mail or call the SEC CGFD (sec.gov.ph > Contacts) quoting CA No. and date. | • Written or e-mail confirmation that the CA is genuine and in force. | Provide a screenshot of the CA; the SEC usually responds within 3–5 business days. |
| 4. Examine SEC Advisories & Orders | Navigate to SEC Enforcement & Investor Protection Department (EIPD) > Advisories. | • “Advisory against [Name] Lending Corp.” (if any); • Cease-and-Desist or Revocation orders. |
An advisory = red flag even if CI & CA exist—it may indicate abusive collection. |
| 5. Verify Online Lending Platform (OLP) | If lending is through an app/website, match the platform against the SEC “List of Registered OLPs” under MC 7-2022. | • Platform name, operator company, CA No., and expiry. | Apple/Google-Play listing ≠ SEC approval; always verify the OLP list. |
| 6. Double-check other licenses (if applicable) | • Barangay/Municipal business permit; • BSP registration if offering e-money or remittance. |
Up-to-date “Mayor’s Permit” and, where required, BSP Certificate. | Local permits do not confer authority to lend—only SEC does. |
| 7. Check corporate filings health | Through SEC “Express Lane System,” order copies of the latest GIS and Audited FS. | • Presence of required capitalization (≥ ₱1 M). • On-time filing status. |
Late filings suggest compliance issues; SEC may suspend for repeated delinquency. |
5. Red flags during verification
No CA shown or CA issued to a different entity.
CA uses manual signature dated 2008-2010 but the corporation claims to have been formed after 2016 (forgeries recycle old templates).
SEC Advisories citing:
- “unreasonable” interest (beyond usury-cap guidelines¹),
- “unauthorized access to contacts/camera,” or
- harassment in collections.
Paid-up capital in GIS is below ₱1 M.
Foreign ownership exceeding 49 % (visible in GIS’ “Nationality” column).
Offers “guaranteed high returns to lenders/investors” (may overlap with investment-taking, requiring additional BSP/SEC licenses).
¹ There is no longer an absolute usury ceiling, but SEC MC 19-2019 compels disclosure and may disallow unconscionable rates under the Civil Code.
6. Consequences of non-verification
| Violation | Penalties on the Corporation & Its Officers |
|---|---|
| Operating without CA | Fine ₱10,000 – ₱50,000 and/or 6 months – 10 years’ jail (RA 9474 Sec. 12). |
| Misrepresentation/forgery of SEC docs | Revocation of CI & CA; prosecution under the Revised Penal Code (Falsification); possible Securities Regulation Code penalties. |
| Continuing harmful practices after SEC advisory | Cease-and-Desist Order, asset freeze, and inclusion on EIPD “Entities to Avoid” list shared with banks and payment gateways. |
| Violations involving online harassment | SEC/EIPD complaint plus criminal charges under RA 10175 (Cybercrime) and RA 10951 (Grave threats, Unjust vexation). |
7. Frequently asked questions (FAQs)
Is a Certificate of Incorporation enough? No. A CI only proves corporate existence; lending authority comes exclusively from the CA under RA 9474.
The company says the CA “is pending renewal”—can it still lend? No. Lending during CA lapse is tantamount to operating without authority and triggers Sec. 12 penalties.
Does the SEC list every legitimate lender online? The SEC maintains updated Excel/PDF lists of registered Lending and Financing Companies + a separate list of approved OLPs. If a name is absent, treat it as suspect and seek written confirmation.
Can a single proprietorship engage in lending? Not under RA 9474. Only stock corporations may obtain a CA. Sole proprietors may give personal loans but may not advertise or operate as a “lending investor.”
Is there a cap on interest rates? Bangko Sentral ng Pilipinas (BSP) Memorandum No. M-2021-040, persuasive on SEC-regulated lenders, sets recommended ceilings of 6 % per month interest + 5 % one-time upfront fee for loans ≤ ₱10,000 and terms ≤ 4 months. Higher rates are not illegal per se but are scrutinized for “unconscionability.”
8. Practical compliance checklist for lending corporations
- Maintain minimum ₱1 M paid-up capital (additional ₱1 M if setting up an OLP).
- Keep GIS and Audited FS filings current (within 30 days and 120 days from AGM/FYE, respectively).
- Post interest-rate and fee disclosure conspicuously (Truth in Lending Act).
- Adopt privacy-by-design and secure data-sharing consents (Data Privacy Act).
- File annual MC 19-2019 disclosure on loans granted, collection methods, and complaints.
- Renew business permits yearly and update mayor’s permit upon address change.
9. Consumer-side quick-lookup flow
- Search SEC list →
- Request CA copy →
- Compare CA details →
- Check SEC advisories →
- Deal or walk away.
10. Conclusion
Verifying a lending corporation’s SEC registration in the Philippines boils down to two simple documents (CI + CA) matched against SEC databases and advisories. Yet behind those papers lies a layered regulatory ecosystem—capitalization rules, foreign ownership caps, annual disclosures, online-platform approvals, and consumer-protection mandates. By following the verification steps above, borrowers, investors, and compliance officers can quickly separate legitimate lenders from fly-by-night operators and avert civil, criminal, and financial fallout.
This article is for informational purposes only and does not constitute legal advice. For specific situations, consult counsel or the SEC Corporate Governance & Finance Department.