Faisao: Pawnshop law doesn’t need revising

The recently-signed Pawnbrokers Acts of 1998 regulating pawnshop business on the island has a clear policy on foreign investments and does not need any amendment as recommended by Gov. Pedro P. Tenorio, the author of the measure said.

Rep. Melvin Faisao, whose bill was signed into law last month, clarified that the required minimum capital of $75,000 for a pawnbroker’s license only covers one shop regardless of whether the business is formed under one corporation or by one individual.

At least half of the net assets must be in cash to qualify under the new regulations, according to the representative who proposed the measure as a step to safeguard the local pawnshop business from abuse and potential criminal offenses.

In signing the law, Tenorio asked the legislature for amendment to clarify the $75,000 net asset requirement as it applies to foreign investments which have to shell out at least $150,000 in capital and another $100,000 as security deposit.

But Faisao maintained a foreign investor must still meet the requirement of minimum capital for a long-term business permit and the security deposit as provided under the Foreign Investment Act.

“In such case, the investor would have the… options to qualify for a pawnshop business under the foreign investment law keeping in mind that the fifty percent cash capital requirement still applies for each pawnshop location operated by an individual or corporation,” he said in a letter to presiding officers of the legislature.

These options include either to invest $150,000 wholly into one pawnshop or into two locations with capital assets of $75,000 each.

Faisao maintained a foreign investor may still use $75,000 of his capital for a pawnshop business, and the remaining balance could be infused into another activity provided the current law allows this set-up.

“(F)or purposes of meeting the capital requirement to qualify as a foreign investor, (he) may engage in a pawnbroker’s business activity as long as the investor complies with the capital requirement (of the law) and the financial records for each pawnshop location are separate from other business activity,” he said.

Faisao also rejected the governor’s recommendation to further clarify what Tenorio called inconsistencies in the bill, such as identification mechanism in a pawnbroker transaction.

The new regulations under Public Law 11-65 is to be implemented by the commerce and the public safety departments.