Bengzon Sarraga Narciso Cudala Pecson & Bengson

March 8, 1988 Bengzon Sarraga Narciso Cudala Pecson & Bengson 6th Flr., SOL Building Amorsolo St., Legaspi Vill. Makati, Metro Manila Gentlemen : This refers to your letter, dated February 17, 1988, requesting for clarification on the procedural requirement enforced by the Commission regarding imposition of exemption fees. It appears therein that your client filed an application for increase in authorized capital stock with the Securities and Exchange Commission and paid the corresponding filing fee therefor, equal to 1/10 of 1% of the increase plus other charges. When the papers were being processed in the Corporate & Legal Department, it was found out that subscribers to the increase of capital stock were not stockholders of record, in other words, they were new subscribers. Thus, in connection with such new subscriptions, your client was required to file a request for exemption from the registration requirement of the Revised Securities Act, and was assessed to pay another 1/10 of 1% of the total amount covered by the new subscription. You are now assailing the legality of the second assessment imposed by the Commission, which you believe is unfair to your client. Anent thereto, section 4(a) of the Revised Securities Act provides that "No securities, except of a class exempt under any of the provisions of Section five hereof or unless sold in any transaction exempt under any of the provisions of Section six hereof, shall be sold or offered for sale or distribution to the public within the Philippines unless such securities shall have been registered and permitted to be sold as herein provided." We assumed that the securities of your client corporation are not "exempt securities" under Section 5 of the Revised Securities Act, neither does the issuance thereof fall within the concept of "exempt transaction" set forth specifically under Section 6(a), #4 of said Act. The Commission, however, from time to time, exempts transactions other than those provided for under Section 6(a) of the Revised Securities Act if it finds that the enforcement of the requirements of registration of this Act with respect to such transactions is not necessary in the public interest and for the protection of the investors by reason of the small amount involved or the limited character of the public offering. (Sec. 6, b, The Revised Securities Act). In this connection, the imposition of exemption fee therefor is explicitly prescribed by Section 6(c) of the Revised Securities Act which is quoted as follows: "A fee equivalent to one-tenth of one per centum of the maximum aggregate price or issued value of the securities shall be collected by the Commission for granting a general or particular exemption from the registration requirements of this Act." The same amount of exemption fee is directed under the "Revised Fees and Charges of the Securities and Exchange Commission." LibLex We trust that the foregoing clarifies your doubt on the matter. Very truly yours, (SGD.) JULIO A. SULIT, JR. Chairman