Atty. Liwayway B. Filart

October 26, 1989 Atty. Liwayway B. Filart Madam : This refers to your letter dated October 2, 1989, requesting opinion on the following query: "Can a corporation duly organized and licensed as a broker and dealer in securities engage in the business of underwriting securities by amending its articles of incorporation so as to include underwriting as one of its purposes and by increasing its capital stock in such a way that the minimum paid-up capital is P20 M which is the minimum paid-up for an investment house? While under Section 13 of PD 129, otherwise known as the Investment Houses Law, an investment house is expressly authorized to engage in the business of a dealer or broker under the Securities Act without obtaining a separate license for the purpose as required in the said law, a stock broker or dealer cannot engage in underwriting of securities without complying with the requirements of PD 129. The law provides, thus: "SECTION 2. Scope . Any enterprise which engages in the underwriting of securities of other corporations shall be considered an "Investment House" and shall be subject to the provisions of this Decree and of other pertinent laws . SECTION 4. Organization and registration ..... The Securities and Exchange Commission shall not register the articles of incorporation of an Investment House, or any amendment thereto, unless it is satisfied from the evidence submitted to it. (a) That all the requirements of this Decree and of existing laws or regulations to engage in the business have been complied with . ...(emphasis supplied). Likewise, it is well-settled that a corporation has only such powers as are expressly granted in its charter or in the statutes under which it is created or such powers as are necessary for the purpose of carrying out its express powers (13 Am. Jur. Sec. 739).Hence, there should be a specification of the corporation's purposes with sufficient clarity and elucidation to define with more certainty the scope of the business. However, while the Revised Securities Act does not expressly prohibit stock broker/dealer from engaging in other business activities, the rules and regulations of the Commission governing stock brokers/dealers expressly provide: "5. Member-firms in any stock exchange shall engage solely and exclusively in the stock and bond brokerage business and in activities directly or indirectly connected therewith or incidental thereto.:(Rules Fixing The Amount of Paid-up Capital of Stock Brokerage Firms and Their Surety Bonds, dated October 9, 1973) . Accordingly, you may choose either of the following alternatives: 1. An investment house be separately organized, or 2. Amend the articles of incorporation in accordance with Section 16 of the Corporation Code converting the stock broker/dealer corporation into an investment house. cdll Please be advised accordingly. Very truly yours, (SGD.) RODOLFO L. SAMARISTA Associate Commissioner