Mr. Antonio P. Salvador

April 12, 1994 Mr. Antonio P. Salvador A.P. Salvador & Associates 43 Maria Eva, Tierra Pura Homes Tandang Sora Avenue, Quezon City S i r : This refers to your letter of April 5, 1994 requesting opinion on the following alleged statement during the stockholders meeting of Ideal Pension Plans Corporation, relative to transfer of shares: " ...all stockholders should first be notified in writing, and if one or more stockholders are interested to buy, said shares should be apportioned accordingly to satisfy all interested buyers." prcd Shares of stock in a corporation are personal property, and it is well settled that the owner, as in the case of other personal property, has an absolute and inherent right, as incident of his ownership, to sell and transfer the same at will except insofar as the right may be restricted by the charter of the corporation or the general law , provided the transfer is in good faith, and to a person capable of assuming the obligations of a stockholder. (12 Fletcher Cyc. Corp. Section 5452). Section 6 of the Corporation Code provides in part: " ...The shares of stock of stock corporation may be divided into shares or series, or both, any of which classes or series of shares may have such rights privileges or restrictions as may be stated in the articles of incorporation ...." (Emphasis supplied). Thus, on several occasions, the Commission opined that in order to be valid and enforceable, any restriction on the transfer of shares of stock must be explicitly provided for in the articles of incorporation. Restrictions on the transfer of shares are essentially contractual in nature between the stockholders and the corporation, and hence, must be embodied in their contract, articles of incorporation. Considering further that shares of stock burdened with restrictions on transferability may fall into the hands of innocent purchasers, the Commission, as a matter of policy, also requires that the restrictions on transfer of shares must be printed in the stock certificates. ( SEC Letter to Ozaeta, Gibbs & Ozaeta, dated October 13, 1964 ). Accordingly, in the absence of an express provision in the articles of incorporation and stock certificate stating that transfers of issued shares should first be offered to the existing stockholders, the transferor mentioned in your letter may legally dispose of or sell his shares to anybody without the need of a waiver from the remaining stockholders. Please be advised accordingly. Very truly yours, (SGD.) ROSARIO N. LOPEZ Chairman