SEC Memorandum Circular No. 7 (2013)

(NAR) VOL. 24 NO. 2 / APRIL - JUNE 2013

[ SEC MEMORANDUM CIRCULAR NO. 7, S. 2013, April 08, 2013 ]

SINGLE BORROWER LIMIT (SBL) AND CREDIT LIMIT ON DIRECTORS, OFFICERS, STOCKHOLDERS AND RELATED INTERESTS (DOSRI)

The Commission En Banc, in its meeting on 08 April 2013, approved the amendment of Rule 3 of the Implementing Rules and Regulations of the Lending Company Act of 2007 (Republic Act No. 9474) by requiring lending companies to comply with the Single Borrower Limit (SBL) and credit limit on directors, officers, stockholders and related interests (DOSRI). Accordingly, the said Rule is hereby amended as follows: “RULE 3. Requirements for Organization (a)Form of Organization xxx (h)The total credit that a lending company may extend to its directors, officers and stockholders shall not exceed fifteen percent (15%) of its networth. For this purpose, loans and other credit extended by a lending company to the following related interests shall be deemed extended to its directors, officers and stockholders:

i. Spouse or relatives within the first degree of consanguinity or affinity, or relatives by legal adoption, of the officer, director or stockholder of the lending company;

ii. Partnership in which a director or officer or stockholder of the lending company, or their spouse or relatives referred to in the preceding item (item i) is a general partner;

iii. Corporations where a director or officer or stockholder of the lending company, or their spouse or relatives referred to in item i above is also a director or officer of the corporation;

iv. Corporations where more than twenty percent (20%) of its subscribed capital stock is owned by a director or officer or stockholder of the lending company or their spouse or relatives referred to in item i above;

v. Corporations wholly or majority-owned or controlled by entities mentioned in items ii, iii and iv above.

(i) The total credit that a lending company may extend to any person, company, corporation or firm shall not exceed thirty percent (30%) of its networth.”The penalties for violations of the aforesaid requirements shall be as provided below: st nd rd 1 2 3 Violation 4 th Offense Offense Offense Offense Total credit extended to P10,000.00 P10,000.00 P10,000.00 Suspension the company’s directors, plus plus plus and/or officers, stockholders P100.00 P200.00 P300.00 revocation of and related interests per day per day per day Certificate of (DOSRI) exceeds 15% Authority after of the company’s due notice/ networth proceedings Total credit extended to P10,000.00 P10,000.00 P10,000.00 Suspension any person, whether plus plus plus and/or individual, partnership P100.00 P200.00 P300.00 revocation of or corporation (Single per day per day per day Certificate of Borrower Limit) Authority after exceeds 30% of the due notice/ company’s networth proceedings This Memorandum Circular shall be published in two (2) newspapers of general circulation in the Philippines and shall take effect fifteen (15) days after the date of such publication. For the Commission:

(SGD.) TERESITA J. HERBOSA Chairperson