Atty. Bede S. Tabalingcos

June 13, 1983 Atty. Bede S. Tabalingcos Head, Legal Department Perpetual Capital Investments and Finance Corporation (PERFINCO) 3rd Floor Midland Buendia Bldg. 403 Buendia Avenue Extension, Makati, Metro Manila Sir : This has reference to your letter dated May 25, 1983 requesting opinion on whether your financing company can accept as payment for the subscription of its stockholder the latter's shares of stock in the Perpetual Savings and Loan Association. In the affirmative, you further inquire how the valuation should be made and whether the Central Bank's approval is necessary. The pertinent provision of the Corporation Code provides, in part, as follows: "SECTION 62. Consideration for stocks . Stocks shall not be issued for a consideration less than the par or issued price thereof. Consideration for the issuance of Stock may be any or combination of any two or more of the following: xxx xxx xxx 2. Property, tangible or intangible ,actually received by the corporation and necessary or convenient for its use and lawful purposes at a fair valuation equal to the par or issued value of the stock issued. xxx xxx xxx Where the consideration is other than actual cash, or consists of intangible property such as patents or copyrights, the valuation thereof shall initially be determined by the incorporators or the board of directors, subject to the approval by the Securities and Exchange Commission. xxx xxx xxx It is explicit from the terms of the law abovequoted that the proposal of the stockholder is legally permissible. The value of the shares of stock must not be less than the par or issued price thereof and the same must be determined by the incorporators or by the board of directors, subject to approval by this Commission. This provision of the New Corporation Code is consistent with the view that shares of stock, although intangible, are personal property and as such, are freely transferable by the owner thereof (Section 63, CCP). To a stockholder, this interest, represented by his stock certificate, furnishes him a convenient means of raising funds when the need arises. He can easily sell his stocks if there is a market for it. This liquidity of shares of stock is an important factor which an investor takes into consideration. Anent your last query, it is opined that the approval by the Central Bank is no longer necessary since as personal property, the alienation of the shares of stock could not be subject to any restriction except as may be expressly provided for in the articles of incorporation. Please be guided accordingly. Very truly yours, (SGD.) JESUS J. VALDES Associate Commissioner