In a statement issued yesterday, the SEC said it will start the imposition of penalties on entities found in violation of the Financing Company Act even as it continues to accept applications for conversion of lending investors into financing companies.
The SEC has urged the country’s over 10,000 lending investors to convert into financing companies even as the deadline for said conversion had already expired last June 6.
An SEC official said the Commission, pending the passage of a bill that would regulate lending institutions, will enforce all actions necessary to force lending entities to comply with the Financing Company Act.
Lending firms have been taking their time complying with the SEC directive since this would entail additional capital. Those operating in Metro Manila will have to raise their capitalization to P10 million while those in the provinces should have at least P2.5 million in capital.
The SEC noted that only 47 out of the total 10,885 lending investors have converted and have been granted licenses to operate as financing companies by the SEC as of May 31, 2003.
Pending applications for conversion to financing companies received by the SEC as of the same period included 26 single proprietorships, six partnerships and 123 existing corporations.
The proposed bill also provides stiffer penalties for erring lending firms. Violators would be fined not less than P10,000, or maximum imprisonment of 10 years, both at the discretion of the courts.