Atty. Rafael Recto

June 29, 1983 Atty. Rafael Recto Recto Law Offices 20 Adams Street, Greenhills San Juan, Metro Manila RE : Class B Preferred Shares of Globe Mackay Cable and Radio Corporation Sir : This has reference to your letter dated May 23, 1983, requesting the opinion of this Commission whether the provision of Article 7 of the Articles of Incorporation of GLOBE MACKAY CABLE AND RADIO CORPORATION on Class "B" Preferred Shares conforms with Section 8 of the Corporation Code and CCP No. 1 of our Rules. cdll The aforesaid Article Seven provides, and we quote: "Additional terms and conditions of the preferred shares, regardless of class or series shall be the following: e) The redemption period of the preferred shares shall for each particular series, be fixed by the Board of Directors which in no case shall be earlier than five (5) years from date of issue, Provided that such redemption period once fixed for a particular series at the time of issue may not be modified or altered while any preferred share corresponding to the particular series remains issued and outstanding; provided, further, that arrangements for early redemption of any outstanding preferred share prior to the fixed redemption period may be effected upon such terms and conditions mutually agreed upon between the Corporation and the holder of the preferred share; Provided, finally, that any redemption must apply to both classes of preferred shares in such manner as not to impair at any time the proportion of Class A and Class B as hereinabove stated." (Emphasis supplied) Section 8 of the Corporation Code of the Philippines provides, and we quote: "SECTION 8. Redeemable Shares . Redeemable shares may be issued by the corporation when expressly so provided in the articles of incorporation .They may be purchased or taken up by the corporation upon the expiration of a fixed period, regardless of the existence of unrestricted retained earnings in the books of the corporation, and upon such terms and conditions as may be stated in the certificate of stock representing said shares." (Emphasis supplied) prcd Section II, par. 2 of CCP No. 1, Rules Governing Redeemable and Treasury Shares * defines redeemable shares as "shares of stock issued by a corporation which have redemption features as expressly provided for in its Articles of Incorporation and certificates of stock representing said shares". In view of the fact that Article Seven, par. (e) of the Articles of Incorporation of the aforementioned corporation provides for the redemption of Class "B" preferred shares, said shares may be considered as having the features of a redeemable share pursuant to the abovequoted provisions. However, the term for the period as provided in Section (e) of said Article Seven should be amended to "not later than 5 years",to read thus: "e) The redemption period of the preferred shares shall for each particular series, be fixed by the Board of Directors which in no case shall not be later than five (5) years from date of issue ...." (Emphasis supplied) Please be guided accordingly. Very truly yours, (SGD.) JULIO A. SULIT, JR. Associate Commissioner