SEC Revokes Licences of 56 Delinquent Financing Companies

The Securities and Exchange Commission (SEC) has revoked the corporate registrations and secondary licences of 56 lending and financing companies due to their failure to meet reportorial obligations. This action is part of the SEC’s ongoing efforts to ensure compliance within the sector.

On 29 May, the SEC’s Financing and Lending Companies Department (FinLenD) cancelled the primary registrations and certificates of authority for 47 companies. These companies were deemed delinquent under Republic Act No. 11232, also known as the Revised Corporation Code (RCC).

The Commission has the authority to declare a corporation delinquent, as per Section 177 of the RCC. A corporation becomes delinquent if it fails to submit required reports three times within a five-year period, whether these omissions are consecutive or intermittent.

The 47 affected corporations reportedly failed to submit critical documents such as audited financial statements and general information sheets. This non-compliance occurred on three separate occasions within a five-year timeframe, also extending to director or trustee compensation and appraisal reports.

The Commission also issued separate orders on 19 May to revoke the corporate registrations of nine additional companies. These revocations were due to their persistent non-compliance with reportorial requirements.

Two of these companies failed to comply with SEC Memorandum Circular No. 28, Series of 2020. This circular requires regulated entities to submit official email addresses and mobile phone numbers for transactions with the Commission.

The remaining seven companies failed to submit their business plans. It is a requirement under SEC Memorandum Circular No. 3, Series of 2022.

This circular outlines the implementation of Bangko Sentral ng Pilipinas Circular No. 1133, Series of 2021. The circular addresses ceilings on interest rates and other fees charged by lending companies, financing companies, and their online lending platforms.

FinLenD reported that these companies consistently failed to adhere to the Commission’s directives. They did so despite having received show cause letters and notices of deficiencies, which clearly outlined their obligations and requested proof of compliance.