Atty. Aaron B. Bautista

July 28, 1994 Atty. Aaron B. Bautista Nubla, Pedrosa & Associates 6th Flr.,Fil-Am Resources Building 231 Juan Luna Street, Binondo, Manila 1005 S i r : This refers to your letter of July 25, 1994 requesting information on the following queries relative to pre-emptive right: 1. Can an increase of subscription within the authorized capital be done only by the Board of Directors at its regular or special meeting called for the purpose, or does it require a stockholders' meeting? 2. In the exercise of the pre-emptive rights of the stockholders who wish to subscribe to the increase in subscription, how will the notice be given to them? 3. Will it be in compliance of law if a corporation sends notice to the stockholders informing them of the increase in subscription and in same notice they are given a period of time within which to exercise their rights to subscribe, and should, within that period, the corporation does not hear from them it is to be understood that they are not interested to subscribed and, therefore, waiving their pre-emptive rights? 4. What other documents are to be submitted to the Commission in connection with the waiver of pre-emptive rights of stockholders? 5. Will a period of 15 to 30 days be a sufficient time for the stockholders to exercise their options? Under the Corporation Code, the corporate powers of corporation are exercised by the Board of Directors (Section 23), unless expressly vested in the stockholders. Since the power to issue shares of stock in a corporation is not one of those expressly granted to the stockholders under the Code, issuance of shares out of the unsubscribed shares of the authorized capital stock does not need stockholders' approval. What is necessary is only a resolution of the board of Directors approving the same. Anent the other four (4) queries, since there is no specific provision of law, rules and regulations on matters of procedure of notifying the stockholders of their right to subscribe and period within which the stockholders can exercise such right, the same are best left to the decision of the Board of Directors. However, a reasonable time should be given to the stockholders. For purposes of compliance, any evidence of waiver by the stockholders is acceptable to the SEC. Very truly yours, (SGD.) FE ELOISA C. GLORIA Associate Commissioner