M. R. Manalad

January 23, 1981 M. R. Manalad President Act Transport Enterprises, Inc. 2488 Aladin St.,Pandacan Manila Sir : This has reference to your letter dated 18 September 1980 requesting the opinion of this Commission on the query posed by one of your stockholders. It asks whether the shares of stock which were reacquired by Act Transport Enterprises, Inc. and become treasury stocks can be distributed equally among the stockholders of the said corporation. Please be informed that there is no prohibition regarding the reissuance of treasury stocks. The new Corporation Code merely has this to state: "SECTION 9. Treasury Shares . Treasury shares are shares of stock which have been issued and fully paid for, but subsequently, reacquired by the issuing corporation by purchase, redemption, donation or through some other lawful means. Such shares may again be disposed of for a reasonable price fixed by the board of directors." (Emphasis ours) Likewise, the provision of Section 39 of the same Code is pertinent on the reissuance to the stockholders of treasury shares: "SECTION 39. All stockholders of a stock corporation shall enjoy pre-emptive right to subscribe to all issues or disposition of shares of any class, in proportion to their respective shareholdings ,unless such right is denied by the articles of incorporation or an amendment thereto." ...(Emphasis ours) Accordingly, where the pre-emptive right is not denied in the articles of incorporation, the re-acquired stocks may be distributed among your remaining stockholders, not equally, but in proportion to their respective shareholdings. Please be guided accordingly. Very truly yours, (SGD.) ROSARIO N. LOPEZ Director Corporate and Legal Department