CBP Circular No. 898-82

October 12, 1982 CBP CIRCULAR NO. 898-82 The Monetary Board, in its Resolution No. 1857 dated October 8, 1982, approved the following guidelines on the public offering of shares of banks applying for expanded commercial banking authority. 1. Item "a" of Subsection 1101.4 of Book I of the Manual of Regulations for Banks and Other Financial Intermediaries is hereby amended to read as follows. "a. Public offering of banks shares . The Monetary Board shall take into consideration the composition of holdings of equity ownership in the applicant bank. In addition to compliance with the provisions of Sections 12, 12-A, 12-B and 12-D of Republic Act No. 337, as amended, a portion of the minimum capital required for a bank seeking to operate under an expanded commercial banking authority shall be publicly offered under the following terms and conditions: "(1) Any such bank seeking to operate under an expanded commercial banking authority, including one which on its own or through merger with other banks or non-bank financial intermediaries meets the minimum capital requirements of P500 million prescribed in Subsection 1106.1, shall cause the public offering of the equivalent of at least ten percent (10%) of such required minimum capital, or P50 million, which need not be over and above their required P500 million capital. "(2) The shares to be publicly offered may be voting or non-voting shares and may come from the bank's existing authorized and unsubscribed stock, if any, or from an increase in its authorized capital stock: Provided, however , That a bank whose authorized capital of P500 million has been fully subscribed and paid in may opt to list or publicly offer at least ten percent (10%) or P50 million of such authorized capital as has been subscribed and paid-in may opt to list or publicly offer at least ten percent (10%) or P50 million of such authorized capital as has been subscribed and paid-in, which are owned by existing stockholders who may be willing to divest themselves of such holdings. "(3) The offering bank shall accept offers to buy or invest in its publicly offered shares of stock from persons or entities who are new investors or existing stockholders whose stockholdings, together with those of their relatives within the third degree of consanguinity or affinity or of firms, partnerships, corporations or associations at least a majority of the voting stocks of which are owned by such stockholders, constitute less than two percent (2%) of the bank's subscribed capital stock: Provided, That the bank shall amend its articles of incorporation so as to explicitly provide therein the waiver by existing stockholders, who are disqualified under these rules, of their preemptive rights to the additional P50 million shares to be publicly offered unless such stockholders do not have preemptive rights under the bank's articles of incorporation: Provided, further , That the waiver may be limited to three (3) months only after which period the disqualified stockholders may purchase shares from the unsubscribed/unsold publicly offered shares: Provided, finally , That the total shares of stock which may be purchased by any qualified buyer or group of buyers shall not exceed ten percent (10%) of the P50 million publicly offered shares of stock. "(4) The price of the shares of stock shall be as fixed by the agreement of the parties: Provided , That the offering price shall in no case exceed the book value of the shares of stock as of the end of the semester immediately preceding the public offering. "(5) The provisions of these guidelines shall be deemed substantially complied with if the bank causes its shares of stock to be publicly offered in the manner and under the conditions herein prescribed for a period of three (3) months. In cases where there are no buyers willing and/or qualified to purchase or invest in the shares of stock being publicly offered within said period, the bank may, after prior written notice to the appropriate supervising and examining department of the Central Bank, sell said shares to its existing stockholders, subject to the limitations on equity holdings prescribed by law and regulations. "(6) The bank shall submit to the appropriate supervising and examining department, for evaluation, a prospectus containing the following minimum information: "(a) Name and address of the issuing bank; "(b) A brief history of the bank's operations and a description of its premises and facilities; "(c) The current authorized capital stock and the stock offered for subscription/sale to the public indicating the classes of stock and the amount for each class presented in tabular form; "(d) Feature of the offer: "1) The number and amount of each class of stock offered; "2) The per share and aggregate offering price of each class of stock and the per share and aggregate proceeds to be received by the bank; "3) The proposed means of distribution; "4) Specific terms of the offer (minimum subscription, payment terms, etc.); and "5) Expiry date of the offer. "(e) Audited statements of condition (format similar to published statement of condition) and earnings and expenses for the last three (3) calendar years: Provided , That banks in operation for less than three (3) years shall disclose their audited financial statements from the start of operation to the last year ended; "(f) Names and addresses of all directors and principal officers and their respective designations, and stock options and other similar plans for directors and officers; and "(g) A list of stockholders owning ten percent (10%) or more of the subscribed capital stock, the number of shares held by each, whether voting or non-voting, and the par value of such shares. The list shall likewise show the ratio of subscribed capital stock held by directors and principal officers to the authorized capital stock; the ratio of the publicly offered shares of stock to the authorized capital stock; and the citizenship and family groupings of stockholders and their corresponding percentages of ownership; and "(7) The applicant bank shall cause the publication of the public offering in a newspaper of general circulation at least twice within a period of one month prior to the offering." 2. Monetary Board Resolutions No. 2231 dated December 11, 1981 requiring the P50 million shares to be publicly offered to be over and above the P500 million minimum capital required, and No. 1195 dated July 2, 1982 providing that the publicly offered shares shall be confined to voting shares only, are hereby repealed/superseded accordingly. FOR THE MONETARY BOARD: (SGD.) GABRIEL C. SINGSON Senior Deputy Governor