Atty. Arturo Juanito Tio-Maturan

November 5, 2001 SEC OPINION Atty. Arturo Juanito Tio-Maturan Maturan Law Office LG-10 Cityland Dela Rosa Condominium, 7648 Dela Rosa St., 1230 Makati City Dear Atty. Maturan, This refers to your letter dated October 17, 2001 requesting opinion on the following queries: "1. Does the contemplated business undertaking or activity of a lending investor fall within the purview of the aforecited primary purpose of said holding company?' 2. Supposing our said client accepts cash deposits as advances for future subscriptions from prospective investors, is it allowed to pay monthly interest therefore prior to conversion?" As stated, your client is a holding company the primary purpose of which is quoted hereunder: "To invest in, purchase or otherwise acquire and hold, use, sell, assign, transfer, mortgage, pledge, exchange or otherwise dispose of personal property of every kind and description, including shares of stocks, bonds, debentures, notes, evidences of indebtedness, contracts and other securities and obligations of any corporation, partnership, company or association, whether domestic or foreign for whatever lawful purpose or purposes the same may have been organized: and to pay therefor in money or by exchanging therefore in stocks, bonds, indebtedness or securities and while the owner or holder of such notes, evidence of indebtedness, contracts and other securities and obligations of any corporation; to receive, collect, dispose of the interest, dividends and income arising from such property and investment and to possess privileges of ownership to the extent authorized by law, without however engaging in any banking or quasi-banking activities, nor shall the corporation engage in the business of an investment company as defined in the Investment Company Act (R.A. 2629) without complying with the provisions of said act provided it shall not engage in stock brokerage and dealer in securities ." Said corporation intends to undertake in activities pertaining to a lending investor, such as taking in cash investments from prospective investors for the purpose of relending or investing the same in a high-yielding venture. As to your first query, the answer is in the negative. The corporation is registered as a holding company. The aforequoted primary purpose does not authorize the corporation to engage in banking business. The answer to the second query depends on the terms of the agreement between the prospective investors and the company with respect to their cash deposits for future subscription. The issue is an internal matter which must be decided by the corporation itself. Hence, we refrain from giving a categorical answer thereto. Very truly yours, (SGD.) BENITO A. CATARAN Director Company Registration and Monitoring Department