SEC to provide regulatory relief to financing, lending companies

MANILA, Philippines — The Securities and Exchange Commission (SEC) is providing regulatory relief to all financing and lending companies as part of efforts to manage the negative impact of the COVID-19 pandemic on businesses.

In a recent Memorandum Circular, the SEC said that in accordance with the Financing Company Act of 1998, the lending Company Regulation Act of 2007 and the Revised Corporation Code of the Philippines, it is providing regulatory relief to financing and lending companies.

As part of the relief measures, the SEC said it is relaxing the amount of net worth financing companies are required to maintain. Financing companies are required a minimum paid up capital of P10 million for those in Metro Manila and first class cities, P5 million for those in other classes of cities and P2.5 million for financing companies located in municipalities.

The SEC is also relaxing the required investment in financing and lending operations as stipulated in the different laws government financing companies.

Furthermore, the SEC is relaxing the period of commencing of financing and lending operations of companies for those that are just planning to operate, but have been affected by COVID-19.

Financing and lending companies that intend to avail of the regulatory reliefs that the SEC will provide need to submit a letter-notification to the SEC stating the regulatory relief to be availed of and the reason for the availment of the relief.

In providing regulatory relief, the SEC cited the Bayanihan to Recover As One Act, which was signed into law on Sept. 11, 2020.

The law was meant to accelerate the recovery and bolster the resilience of the Philippine economy through measures grounded on economic inclusivity and collectivity growth through fiscal sustainability among others.

The law also encouraged the Bangko Sentral ng Pilipinas  and the SEC to create measures, including the relaxation of regulatory and statutory restrictions and requirements for a period of  not more than oneyear  from  their  date  of effectivity  to encourage the banking industry and other financial institutions  to extend  loans and other  forms of financial accommodation to help businesses recover from the economic effects  of the  COVID- 19 crisis and  to enable the banking industry  to manage appropriately its risks and  potential losses.

The BSP and the SEC were likewise authorized to grant reporting relief  to their supervised entities by allowing staggered booking  of allowance for credit losses for all types of credit accommodations extended to individuals and business entities affected by the pandemic.