Ms. Fe De Los Santos-Quiaoit

August 19, 1991 Ms. Fe De Los Santos-Quiaoit Jardine Davies Building 222 Sen. Gil J. Puyat P.O. Box 561 MCC Makati Metro Manila M a d a m : This refers to your letter dated July 18, 1991 inquiring whether or not foreign ownership in pre-need companies is limited to not more than 40% of the authorized shareholdings. LibLex Please be advised that there is no existing law expressly limiting the entry of foreign investors in the pre-need industry. Neither is it covered by RA 1180, as amended, otherwise known as the Retail Trade Nationalization Law as said Law only covers "consumer goods". Pre-need plans are "securities" specially covered under the Revised Securities Act. As such, it is not within the coverage of RA 1180, as amended. However, please take note that since RA 7042, otherwise known as the Foreign Investments Act of 1991 is not yet implemented as its Implementing Rules have not yet been approved, the provisions of the old law, Executive Order No. 226, otherwise known as the Omnibus Investments Code of 1987, shall be complied with pursuant to the transitory provision of the RA 7042 which provides: "SECTION 15. Transitory Provisions. Prior to effectivity of the implementing rules and regulations of this Act, the provisions of Book II of Executive Order 226 and its implementing rules and regulations shall remain in force ...(Emphasis supplied) Under Executive Order No. 226, if the investment of non-Philippine nationals is such that the total foreign participation in the outstanding capital stock shall exceed 40%, prior authority from the Board of Investments shall be secured. Said Office, pending implementation of RA 7042, determines whether or not the business is still open to foreign participation to more than 40% of the outstanding capital stock or whether or not it is already crowded or adequately exploited by Filipino citizens. cdll Please be advised accordingly. Very truly yours, (SGD.) ROSARIO N. LOPEZ Chairman