CBP Memorandum

May 30, 1958 CBP MEMORANDUM TO : Authorized Security Dealers In its Resolution No. 715 dated May 6, 1958, the Monetary Board decided to revise the general policy on switch transactions involving securities for the account of nonresidents, as follows: That switch transactions in Philippine domestic securities including the export of securities from a nonresident to another nonresident are allowed only after the following conditions are satisfied: (1) That the purchase of the original securities by the nonresident of any alien holder and the dollar remittance of the dividends earned have been authorized by the Central Bank; (2) That the switch transaction is from stocks with larger earnings and higher remittable dividends to stocks with smaller earnings and lower remittable dividends or to stocks of highly speculative character, such as those of oil exploration companies; and (3) That in no case, however, shall the investment remittances of the dividends in the new stocks as a result of switch transactions exceed the amount of dividends allowed to be remitted of the original stocks. In view of this decision of the Monetary Board, effective May 30, 1958, all applications on E. C. Form X for switch transactions involving Philippine domestic securities belonging to nonresidents, shall be forwarded to the Exchange Control Department of the Central Bank for action, together with the following: (1) A certification that the owner of the securities to be sold is a nonresident; (2) A certification that the said securities have been acquired under license issued by or in behalf of the Central Bank, copy of which license shall be submitted; and that dollar dividends thereon have been authorized to be remitted by the Central Bank; (3) A statement indicating the price at which the said securities will be sold and the portion of the proceeds of the sale which will be reinvested in other Philippine domestic securities; LLphi (4) A statement indicating the Philippine domestic securities which will be purchased out of such proceeds. (SGD.) ANDRES V. CASTILLO Deputy Governor