Carpio, Villaraza & Cruz

April 7, 1988 Carpio, Villaraza & Cruz 5th Floor, LTA Building 118 Perea St.,Legaspi Village Makati, Metro Manila Gentlemen : This refers to your letters dated March 7 and 30, 1988, requesting the confirmation of the Commission on the contentions stated therein. It appears therein that your client, Hambrecht & Quist of the United States of America plans to incorporate a domestic corporation to be called "H & Q Philippine Ventures, Inc.".It will be organized as a holding company .Its subscribed capital stock will amount to about P210 Million, a large majority of which shall be held by foreign investors. Said holding company will be managed by another domestic corporation to be incorporated as "Hambrecht & Quist Philippines, Inc.".In this connection, you seek the confirmation of this Commission that: 1. The holding company can be registered, and may operate, as an ordinary corporation under the Corporation Code; 2. The foreign equity in the holding company can, subject to the BOI approval, exceed 40% of the total equity, provided that investments by the holding company in operating companies in the Philippines will be subject to the relevant nationality laws. Anent thereto, please be advised that the Commission interposes no objection to your statements above, and hereby confirms the same provided that the proposed "Philippine Ventures, Inc." will not engage in the business of an investment company under R.A. 2629, otherwise known as "the Investment Company Act". Typical example of investment companies are mutual funds which operate by pooling together into one big fund all the idle and dormant money of the different small and big investors which are carefully invested, through professional management and expert supervision in a number of carefully screened and diversified industries, the profits and dividends of which are in turn distributed among all the investors of the funds in proportion to the amount of their investments. ( SEC Opinion, dated July 27, 1976 ). Neither shall "H & Q Philippine Ventures, Inc. operate as an investment house under P.D. 129. Furthermore, favorable approval from the Board of Investments should be secured on articles of incorporation and by-laws of the proposed corporation considering that foreign equity therein will exceed 40% of the total investments. Very truly yours, (SGD.) JULIO A. SULIT, JR. Chairman