Rhealeth Krizelle Ramos 2A, Ateneo Law
FINANCING COMPANY ACT OF 1998 R.A. 8556 A Summary This Act amended the former Financing Company Act (R.A. 5980) Approved: Feb. 26, 1998
Policies: promote the activities activities of financing financing and To regulate and promote leasing companies To recognize and strengthen their critical role in providing medium & long-term credit for investments To curtail and prevent acts or practices prejudicial to the public interest so that that they may be in a better better position to extend service in a fair manner Important terms: 1. Fina Financ ncin ing g comp compan anie ies s 2. Credit 3. Fina Financ ncia iall leas leasin ing g 4. Purc Purcha hase se dis disco coun untt 5. Leas Lease e ren renta tals ls (listen to the report for further explanations) Authorities/Agencies concerned:
1.
SEC: Securities and Exchange Commission Empowered to implement the provisions of this Act Exception Exception:: cases cases where the BSP has superviso supervisory ry authority under the provisions of RA 7653 2. Monetar Monetary y Boar Board d of of BSP BSP Empowered to prescribe prescribe the maximum maximum rate/s rate/s of Empowered purchase purchase discounts discounts,, lease lease rentals, rentals, fees, fees, service service and other charges of financing companies Also empowe empowered red to change change,, elimin eliminate ate or grant grant Also exemption exemptions s from or suspend suspend the effectivity effectivity of such rule rules s when whenev ever er warr warran ante ted d by prev prevai ailin ling g socio socio-economic conditions
3. Regi Regist ster er of of Deed Deeds s Shall Shall open open and maint maintain ain a regist register er of financ financial ial leases leases as an adjunc adjunctt to the chattel chattel mortga mortgage ge registry Form of organization and capital requirements Organized in the form of stock corporations at least 40% of the voting stock of which is owned by Philippine citizens Capital needed: P10M: P10M: if located in Metro Manila Manila and other first class cities P5M: other classes of cities P2.5M: in municipalities No foreign national national may be allowed allowed to own stock if his countr country y does does not accord accord the same same recipr reciproca ocall rights rights to Filipinos Requirements for registration
1. 2. 3.
Compliance with the requirements provided by law of the specific business for which the applicant is proposing to be incorporated Reasonab Reasonable le assurance assurance of of protection protection of the the interest interest of the general public Compliance Compliance with the the require requirements ments of this this Act
Rights 1. 2. 3. 4.
and powers of financing companies Engage Engage in quasi-ban quasi-banking king and and money market market operatio operations ns Engage Engage in trust trust oper operati ations ons Issue bonds bonds and other other capital capital instrume instruments nts Redi Redisc scou ount nt thei theirr pape paperr with with gove govern rnme ment nt fina financ ncia iall institutions 5. Participate Participate in in special special loan and and credit credit programs programs sponso sponsored red by or made made avail availabl able e throug through h govern governmen mentt finan financia ciall institutions 6. Provid Provide e foreig foreign n curren currency cy loans and leases leases to enterp enterpris rises es who earn foreign currency All All thos those e ment mentio ione ned d abov above e are are subj subjec ectt to cert certai ain n limitations, please listen to the report.
Liability of lessors
Rhealeth Krizelle Ramos 2A, Ateneo Law
Financing companies shall not be liable for loss, damage or injury caused by: a motor vehicle, aircraft, vessel, equipment, machinery or other property leased to a third person or entity
except when any of the above-mentioned is operated by the financing company, its employees or agents at the time of the loss, damage or injury.
Penalties 1. Who may be liable a. Persons, associations, partnerships or corporations, including the managing officer thereof Engage in the business of a financing company without authority Hold themselves out to be a financing company without authority Make use of train or firm name containing the words “Financing Company,” “Leasing Company,” “Finance and Leasing Company,” “Finance and Investment Company,” or any other designation that gives the impression that it engages in the business of a financing or leasing company without authority Violate the provisions of this Act b. Any officer, employee, or agent of a financing company Knowingly and willingly make any statement in any document required to be filed under this Act, which is false or misleading Overvalue or aid in undervaluing any securities for the purpose of influencing the way the action of the company on any loan, or discounting line. c. Any officer, employee, or examiner of the SEC directly charged with the implementation of this Act Commit, connive, aid or assist in the commission of acts enumerated above. 2.
Penalty P10,000
to P100,000
Imprisonment Both
for not more than 6 months
