MORNBFI Vol. 1 - Planters Development Bank

APP. Q-1908.12.31f. PURCHASE DISCOUNT is thedifference between the value of thereceivables purchased or credit assigned, andthe net amount paid by the finance companyfor such purchase or assignment, exclusiveof fees, service charges, interest and othercharges incident to the extension of credit.g. RECEIVABLES FINANCING is amode of extending credit through thepurchase by, or assignment to, a financingcompany of evidences of indebtedness oropen accounts by the discounting orfactoring.h. DISCOUNTING is a type ofreceivables financing whereby evidencesof indebtedness of a third party, such asinstallments contracts, promissory notes,and similar instruments, are purchased by,or assigned to, a financing company in anamount or for a consideration less than theirface value.i. FACTORING is a type ofreceivables financing whereby openaccounts, not evidenced by a writtenpromise to pay supported by documentssuch as but not limited to invoices ofmanufacturers and suppliers, deliveryreceipts and similar documents, arepurchased by, or assigned to, a financingcompany in an amount or for aconsideration less than the outstandingbalance of the open accounts.j. LEASING shall refer to the financialleasing which is a mode of extending creditthrough a non-cancellable contract underwhich the lessor purchases or acquires atthe instance of the lessee heavyequipment, motor vehicles, industrialmachinery, appliances, business and officemachines, and other movable property inconsideration of the periodic payment bythe lessee of a fixed amount of moneysufficient to amortize at least 70% of thepurchase price or acquisition cost, includingany incidental expenses and a margin ofprofit, over the lease period. The contractshall extend over an obligatory periodduring which the lessee has the right tohold and use the leased property and shallbear the cost of repairs, maintenance,insurance and preservation thereof, butwith no obligation or option to the part ofthe lessee to purchase the leased propertyat the end of the lease contract.k. PAID-UP CAPITAL refers to theamount paid for the subscription of stockin a corporation including the amount paidin excess of par value, while CAPITALCONTRIBUTION refers to the totalcontributions of the partners in apartnership.l. NETWORTH is the excess of assetsover liabilities, net of appraisal surplus, andbooked valuation reserves, capitaladjustments, overstatement of assets andunrecorded liabilities.Sec. 2. Form of Organization. Financingcompanies shall be organized in the formof: stock corporations in accordance withthe provisions of the Corporation Codeof the Philippines (Batas Pambansa Blg.68) or general partnerships pursuant tothe provisions of the New Civil Code ofthe Philippines and subject to thefollowing:a. At least sixty percentum (60%) of theoutstanding capital stock of the corporation,and in case of a partnership, at least sixtypercentum (60%) of the total capitalcontributions of the partners, shall be ownedby citizens of the Philippines.b. A minimum paid-up capital, in caseof corporations, and capital contribution incase of partnerships, that shall maintaintheir principal offices in the areas hereunderspecified, shall be made in cash or inproperty of at least:1) P10,000,000 - Metro Manila Area2) 5,000,000 - First Class Cities outsideMetro Manila3) 2,500,000 - Second Class Citiesand First ClassMunicipalitiesQ RegulationsAppendix Q-19 - Page 2Manual of Regulations for Non-Bank Financial Institutions