Mr. Romualdo V. Suyosa

May 12, 1982 Mr. Romualdo V. Suyosa Hisil Mining Exploration Corporation Company Suyosa Building Km. 17 South Superhighway Bicutan, Paraaque, MM Dear Mr. Suyosa: This refers to your letter dated February 22, 1982 requesting opinion of this Commission on the queries posed therein. It appears from your letter that the Hisil Mining Exploration Company which is a duly registered partnership with a paid-up capital of P35,000.00, is the registered owner of six (6) silica mining claims in Nabas, Aklan (Unisu 1 to 6); that all six claims are under an active mines operating agreement with Unidos Mining Corporation; that after the issuance of the leases for Unisu 1 to 4, you propose to incorporate (Hisil Mining Exploration Co., Inc.) with a subscribed and paid-up capital almost the same amount of the paid-up capital of the present partnership, that the new corporation will acquire all the assets and assume all the liabilities of the partnership, that after incorporation you plan to sell part of your shares of stock representing about 10 to 15% of the paid up and issued capital stock to a Japanese small scale miner who might be able to assist you establish a silica powder and silica flux processing corporation. Your queries are: 1. Can the proposed new corporation accept the investment of the Japanese national up to 15% of the total subscribed capital stock of the corporation? 2. If the reply is affirmative, what are the procedures and/or requirements to effect the transfer of the shares of stock? Before we answer your first query, it is clear that the paid-up capital of P35,000.00 would suffice for the proposed new corporation which is merely an exploration company as it will be organized for the purpose of searching, exploring, staking or otherwise acquiring mineral and/or mineral claims of whatever nature. Said corporation may therefore accept the investment of the Japanese national up to 15% of its total subscribed capital stock because it is well within the constitutional limit of 60% Filipino owned and 40% alien participation in corporations. Relative to your second query, please be advised that an owner of stock has an absolute and legal right, as an incident of his ownership, to sell and transfer the shares, subject to reasonable restrictions upon the transfer of stock appearing in the Articles of Incorporation which are necessary and convenient to the attainment of the objects for which the company was incorporated. Thus, the transfer of stock from one stockholder in favor of third parties does not require the intervention or consent of the Commission. The transfer is merely reflected in the stock and transfer book of the corporation. cdll This Commission had occasion to discuss the procedure on transfer of shares, which for your ready reference and guidance, we hereby reiterate: "In cases of fully paid shares, the vendor-stockholder merely endorses the stock certificate in favor of the transferee, and the latter presents the same to the secretary of the corporation who in turn effects the transfer in stock and transfer book of the company, issues a new stock certificate in favor of the transferee, and conceals the former stock. As for the shares subscription not fully paid, it is necessary that a Deed of Assignment be paid, it is necessary that a Deed of Assignment be made, stating therein the subscription rights sold and an undertaking of the transferee to assume payment of the unpaid balance to the corporation. This Deed of Assignment must, however, be submitted to the Board of Directors of the corporation for approval (cases cited, SEC Opinion dated April 12, 1982) Please be advised accordingly. Very truly yours, (SGD.) JULIO A. SULIT, JR. Associate Commissioner