Mr. Rafael L. Llave

January 6, 1999 Mr. Rafael L. Llave Philippine Stock Exchange Philippine Stock Exchange Centre Exchange Road, Ortigas Center, Pasig City S i r : This refers to your letter dated January 4, 1998 requesting this Commission to issue a formal opinion on the matter of issuance of stock certificates by listed companies to its shareholders. The Commission, on several occasions, has opined that one may own share of corporate stock without possessing a stock certificate, which after all is merely an evidence of ownership of the stock. For as long as the subscriber to the stock is duly recorded in the Stock & Transfer Book of the corporation as the owner, he is considered a stockholder of record and is entitled to all the rights of a stockholder. However, while the issuance of a stock certificate is not a condition precedent to render one a stockholder, every stockholder has a right to have a proper certificate issued to him by the corporation, upon demand, as soon as he has complied with the conditions which entitle him to one. The pertinent provisions of the Corporation Code provide: "SECTION 63. Certificate of stock and transfer of shares . The capital stock of stock corporation shall be divided into shares for which certificates signed by the president or vice-president, countersigned by the secretary or assistant secretary, and sealed with the seal of the corporation shall be issued in accordance with the by-laws. ..." (Emphasis supplied) "SECTION 46. Issuance of stock certificates . No certificate of stock shall be issued to a subscriber until the full amount of his subscription together with interest and expenses (in the case of delinquent shares),if any is due, has been paid." Thus, while under the Revised Securities Act, listed issuers of securities are not expressly required to issue stock certificates, under the Corporation Code, all corporations, as a general rule, are duly bound to issue stock certificates to their stockholders as soon as their subscriptions are fully paid. The duty of the corporate secretary or transfer agent in case of listed corporations to issue stock certificates to those entitled thereto, upon demand, is a ministerial duty enforceable by mandamus. However, as earlier discussed, being a mere evidence of ownership which can be substituted by any other form of evidence, a stockholder may opt not to be issued a stock certificate. Accordingly, the Philippine Central Depository (PCD),which is the legal owner of the shares of stocks lodged in the PCD system, may opt not to be issued jumbo certificates. However, should any of the beneficial owners of the stock held by it demand for the issuance of a physical certificate, PCD should cause the issuance thereof by complying with all the conditions therefor. Very truly yours, (SGD.) DANILO L. CONCEPCION Associate Commissioner