Rules Regulating the Issuance of Property Dividends

June 9, 1992 RULES REGULATING THE ISSUANCE OF PROPERTY DIVIDENDS Pursuant to the authority vested in this Commission as provided for under Section 143 of the Corporation Code of the Philippines and in order to protect the interest of stockholders and creditors in stock corporations, the following rules regulating the issuance of property dividends are hereby promulgated. LexLib SECTION 1. All corporations that have declared and/or issued property dividends in accordance with the provisions of the Corporation Code of the Philippines shall send notice of such dividends within thirty (30) days from the date of the declaration thereof. The notice of the declaration and/or issuance of the property dividends shall show, in scheduled form, the nature of property declared as dividends, their individual book values and market values, if any, and the manner in which such property are distributed to the stockholders. SECTION 2. The issuance of the property dividends shall conform with the following conditions: a) That the property to be distributed as dividends shall consist only of property which are no longer intended to be used in the operation of the business of the corporation and which are practicable to be distributed as dividends; b) That the issuance of the property dividends shall not result to an inequitable distribution of property to the stockholders in terms of the book values and market values, if any, of the property distributed; and c) That when the distribution of dividends is made where some stockholders will receive cash and the others will receive property, the prevailing market value of the property, as agreed upon by the stockholders shall be considered in determining the equitable distribution of the total dividends. cdlex SECTION 3. No property dividends in the form of land shall be issued to a foreign individual or foreign-owned corporation which will violate the provision of the constitution of the Philippines on Land ownership. SECTION 4. No actual distribution of property dividends shall be made unless approved by the Commission. SECTION 5. The issuance of property dividend shall be supported by the following: a) board resolution approving the issuance of property dividend. b) List of stockholders (certified by the Corporate Secretary) as of record date showing the corresponding subscription of each stockholder and the allocation of the proposed dividend. c) Audited financial statements as of the fiscal year prior to the declaration of the dividend. d) Detailed schedule of the property account, (certified by the company accountant),which shall include the property to be distributed as dividend, showing the cost and the book value of the property as of the date coinciding with the aforecited audited financial statements. e) When the distribution of dividend involves property and cash, such that some stockholders will receive property and the others will receive cash, the detailed schedule of the property account should also include the prevailing market value of property as agreed upon by the stockholders. SECTION 6. Any violation of these rules shall be penalized by a fine of 1/10 of 1 per centum of the amount declared as dividend but not less than Two Thousand (P2,000.00) Pesos and such other sanctions as provided for under Section 144 of the Corporation Code of the Philippines. SECTION 7. These rules shall take effect fifteen (15) days after their publication in two (2) newspapers of general circulation in the Philippines. (SGD.) ROSARIO N. LOPEZ Chairman