Mr. Gilbert B. Rosales

June 29, 1982 Mr. Gilbert B. Rosales Trans World Trading Co.,Inc. Don Pablo Bldg.,114 Amorsolo St. Makati, Metro Manila Sir : This refers to your letter-query dated April 2, 1982, requesting for opinion on the following issues: LexLib 1. Effect of the 5-year period limitation on the right of founders' share to vote and be voted for in the election of directors under Section 7 in relation to Section 148 of the Corporation Code of the Philippines, to corporations already existing at the time of effectivity of the Code. 2. Whether or not holders of common shares are entitled to vote in the amendment of by-laws in as much as nowhere in the articles of incorporation or in the by-laws are they given this right to vote. Under Section 148 of the Corporation Code of the Philippines, existing corporations affected by the new requirement under the Code are given a period of two (2) years from its effectivity (May 1, 1980) within which to comply the same. Consequently, you are required to file an amended articles of incorporation specifying such period (not exceeding five years), subject to the approval of the Commission. The five-year period shall commence from the date such amendment to the articles of incorporation is approved by the Commission. If a corporation does not file an amendment to its articles of incorporation, on or before May 1, 1982, the Commission will consider the limitation laid down by Section 7 of the Corporation Code as inserted into said articles on May 1, 1980 (the date the Corporation Code became effective). As a matter of policy, the Commission will consider the limitation period in the corporation's articles of incorporation providing for founders' shares to be effective up to April 30, 1985. (SEC Opinion, April 26, 1982). With respect to the second issue, Section 6 of the Corporation Code provides in part: " . . . no share may be deprived of voting rights except those classified and issued as "preferred" or "redeemable" shares, unless otherwise provided in this Code. . . .". Common shares, therefore, cannot be deprived of voting rights, unless declared delinquent under Section 71 of the Corporation Code. Under the same section (paragraph 6, No. 2 thereof), non-voting shares as provided for in the articles of incorporation, nevertheless are entitled to vote in the amendment of by-laws. cdll Please be advised accordingly. Very truly yours, (SGD.) JULIO A. SULIT, JR. Associate Commissioner