Mr. Ong Chee Han

October 19, 1989 Mr. Ong Chee Han Sir : This refers to your letter dated August 9, 1989, requesting the opinion of this Commission on the following queries: 1. Can the share premium or the excess over paid-up capital be used for the issuance of additional stocks to the existing shareholders? 2. If not allowed, in what way can the share premium or excess over paid-up capital be reduced? Considering that when a corporation converts the premium or contributed surplus into capital by issuing to its stockholders shares of stock representing their respective participation, it actually parts with nothing but merely transfers the surplus to capital account and issues shares of stock to represent the same, the Commission En Banc in its Executive Meeting of October 17, 1989, resolved to allow the declaration of dividends from paid-in surplus subject to the following conditions: 1. That they be declared only as stock dividends and not as cash dividends; 2. That no creditor shall be prejudiced therefrom; 3. That there shall be no resulting impairment of capital. Very truly yours, (SGD.) ROSARIO N. LOPEZ Chairman