Globe Mackay Cable and Radio Corporation

November 23, 1982 Globe Mackay Cable and Radio Corporation c/o Atty. Rafael Recto Recto Law Offices 20 Adams St.,Greenhills San Juan, Metro Manila Gentlemen: This relates to your letter of November 4, 1982 inquiring whether the provisions of the articles of incorporation of Globe Mackay Cable and Radio Corporation on class "A" preferred shares conform with the classification of redeemable shares under Section 8 of the Corporation Code of the Philippines. cdlex The facts on record show that the articles of incorporation of the aforenamed corporation explicitly provides for the redemption of its preferred shares. The pertinent provision of Article Seven provides in part as follows: (e) The redemption period of the preferred shares shall, for each particular series, be fixed by the Board of Directors which in no case shall be earlier than five (5) years from date of issue, Provided, further, that arrangements for early redemption of any outstanding preferred share, prior to the fixed redemption and conditions mutually agreed upon between the Corporation and the holder of preferred shares. Provided finally, that any redemption must apply to both classes of preferred shares in such manner so as not to impair at any time the proportion of Class A and Class B as hereinabove stated. (Emphasis supplied) Redeemable shares have been defined as "shares of stock issued by a corporation which said corporation can purchase or take up from their holders as expressly provided in its articles of incorporation." (Sec. 2, par. 2, CCP No. 1, Rules Governing Redeemable and Treasury Shares). Additionally, Section 8 of the Corporation Code provides: Redeemable shares may be issued by the corporation when expressly so provided in the articles of incorporation .They may be purchased or taken up by the corporation upon the expiration of a fixed period, regardless of the existence of unrestricted retained earnings in the books of the corporation, and upon such terms and conditions as may be stated in the certificate of stock representing said shares. (Emphasis ours.) Considering, therefore, that the subject corporation provides for the redemption of Class "A" preferred shares in Articles Seven par. (e) of its articles of incorporation, said shares can thus be classified as redeemable shares shares under Section 8 of the Corporation Code and the definition laid down in CCP No. 1, Rules Governing Redeemable and Treasury Shares. Very truly yours, (SGD.) JULIO A. SULIT, JR. Associate Commissioner