Atty. Eduardo F. Hernandez

April 19, 1982 Atty. Eduardo F. Hernandez 5/F Magsaysay Building T.M. Kalaw St.,Ermita, Manila Dear Atty. Hernandez: This refers to your letter-request dated April 2, 1982 relative to the proposed amendments of the articles of incorporation of the University of the East (UE). It appears from your letter that your client (UE) is contemplating to amend its articles of incorporation in order to comply with the requirement of Section 7 of the Corporation Code of the Philippines (BP Blg. 68) limiting to five (5) years only the exclusive right of founders' shares to vote and be voted for in the election of trustees, inter alia; that these amendments will have to be formally submitted to the stockholders for approval; that to call a special stockholders' meeting for that purpose at this time is difficult and impractical considering that the regular annual stockholders' meeting as prescribed in the by-laws is May 30, 1982, which is not far away; that to avoid added expenses and inconveniences to the corporation and its stockholders and to insure bigger attendance for the adequate consideration of the proposed amendments, you now request that your client be allowed to formally present the abovementioned amendments to the articles for approval of the stockholders only on May 30, 1982 and to submit the said amended articles to the SEC within a reasonable period from May 30, 1982. In sum, you want this Commission to grant you a reasonable extension of time within which to file the contemplated amendment articles of incorporation of UE. The pertinent provisions of the Corporation Code state that: SECTION 7. Founders' shares . Founders' shares classified as such in the articles of incorporation may be given certain rights and privileges not enjoyed by the owners of other stocks, provided that where the exclusive right to vote and be voted for in the election of directors is granted, it must be for a limited period not to exceed five (5) years subject to the approval of the Securities and Exchange Commission. The five (5) year period shall commence from the date of the aforesaid approval by the Securities and Exchange Commission . SECTION 148. Applicability to existing corporations . . . . . Provided, that were any such provision is affected by the new requirements of this Code, said corporation shall, unless otherwise herein provided , be given a period of more than (2) years from the effectivity of this Code within which to comply with the same. Relative thereto, we refer you to our Opinion dated March 15, 1982 wherein we emphasized that Section 7 of the Corporation Code is a new provision inserted by the lawmakers precisely to avoid abuse in the founders' shares, considering that some existing articles of incorporation absolutely deprive stockholders of the right to participate in the election of directors and in effect perpetually reserve only to a minority (holders of founders' shares) the prerogative of being directors and managers of the corporate affairs. This provision, therefore, prescribed be a fixed and limited period of five (5) years, subject to approval by the Commission, for the exercise of the right to vote and be voted for as directors, which five-year period shall commence from the date of approval by the Commission. Considering that your request is for the purpose of complying with the expressed mandate of the law, the Commission hereby grants your request, provided that you file the amended articles of incorporation within fifteen (15) days from May 30, 1982. Please be advised accordingly. Very truly yours, (SGD.) JULIO A. SULIT, JR. Associate Commission