RULES AND REGULATIONS ON MICROFINANCE NON-GOVERNMENT ORGANIZATIONS (Microfinance-NGO) RULE 1 Title ‘These Rules shall be known as the Rules and Regulations on Microfinance promulgated pursuant to the Corporation Code of the Philippines, Batas Pambansa Big. 68, Securities Regulation Code, Presidential Decree No. 902-A, Financing Company Act, RA 8556 (An Act Amending Republic Act No. 5980), Lending Company Regulation Act of 2007 and Social Reform and Poverty Alleviation Act, RA 8425. As {a) {b) () () (e) RULE 2 Definition of Terms used in these Rules, the following terms shall mean: Microfinance ~ a credit and savings mobilization program exclusively for the poor to improve the asset base of the households and expand the access to savings of the poor. It involves the use of viable alternative credit schemes and savings programs including the extension of small loans, simplified loan application procedures, group character loans, collateral free arrangements, alternative loan repayments, minimum requirements for savings, and small denominated instruments. Affiliate shall refer to a corporation, or person that directly or indirectly or through one or more intermediaries, controls or is controlled by, or is. under common control with the person specified, through ownership of voting shares, by contract or otherwise*. Subsidiary shall refer to an affiliate controlled by a specified person, directly or indirectly of intermediaries. Branch Office — shall include an extension office, unit, satellite office, etc. of a Microfinance-NGO with a Certificate of Authority to operate as such. BSP shall refer to the Bangko Sentral ng Pilipinas. * Sourced from the definition under SEC rules on Form and Content of Financial Statements whose shares of stocks are offered for sale to the public (1973) cited in Villanueva Phitippine Corporate Law, p. 70 (2001)iC) () (a) @ @ (k) 0 (m) Certificate of Authority (CA) shall refer to a certificate issued by the SEC in favor of a Microfinance-NGO to engage in the business of Microfinance. Charges on loan shall refer to agreed upon reasonable and conscionable interest rate, service charge, penalty, discount, and such other charges incidental to microfinance lending activity. Debtor shall refer to a borrower or person granted a loan by a Microfinance-NGO. ‘Monetary Assets shall refer to total assets inclusive of valuation reserves and deferred income but shall not include investments in real estate, in shares of stock of real estate development corporations or in real estate based projects, leasehold rights and improvements, fixed assets, foreclosed properties and prepayments. Microfinancing* Loans ~ are small loans granted to the basic sectors on the basis of the borrower's cash flow and other loans granted to the poor and low-income households for their microenterprise and small businesses to enable them to raise their income levels and improve their living standards. Microfinance-NGO shall refer to a non-stock, non-profit organizations focusing on upliftment of the basic or disadvantaged sectors of society by providing advocacy, training, community organizing, research, access to resources and other similar activities, engaged in granting loans from its own capital funds or from funds sourced from not more than nineteen (19) persons. Networth shall refer to the excess of assets over liabilities, net of appraisal surplus, unbooked valuation reserves, capital adjustments, overstatement of assets and unrecorded liabilities. SEC or Commission shall refer to the Securities and Exchange Commission * http/ /www.bsp gov.ph/downloads/regulations(a) (b) RULE 3 Requirements for Organization Form of Organization A Microfinance-NGO (a non-government organization engaged in microfinance activities) shall be established as a non- stock corporation or anon government corporation. Existing Microfinance-NGO shall, within a period of one (1) year from the effectivity of this Rules shall secure a Certificate of Authority. to operate a Microfinance-NGO finance company. Otherwise, they shall be disallowed from engaging in the microfinance business. ii, The word "Microfinance” shall always be included in the corporate and trade name to indicate its primary activity. iii, ‘The purpose clause of the Articles of Incorporation shall state that they shall conduct microfinance operations pursuant to Republic Act No, 8425, the Social Reform and Poverty Alleviation Act. Requirements for Securing an Authority — A Microfinance-NGO shall file with SEC four (4) copies of a duly accomplished application form to operate as a Microfinance-NGO, signed under oath by the President, together with the following documents in the prescribed form: i, Information Sheet; ii, NBI clearance of each director /officer; iii. Foreign directors/officers, in addition to the NBI Clearance, shall submit a clearance from the Bureau of Immigration (BI), a photocopy of his passport showing a valid visa or stay in the Philippines, ACR i-card, and a work permit issued by the Department of Labor and Employment; iv. President Sworn Statement and Undertaking that the corporation will not accept or solicit investments, other than loans, from more than 19 persons without SEC approval, and upon presentation of valid claims, it shall immediately indemnify or return the investment of persons from said unauthorized public solicitation of funds; Moreover, the sworn statement shall likewise contain an undertaking that the country or state of the foreign applicant