Mr. Juan B. Denopra

May 2, 1995 Mr. Juan B. Denopra Denopra and Associates 93 Donasco St. Tandag, Surigao del Sur S i r : This refers to your letter requesting this Commission to prevent any transfer of stock and/or capital restructuring of Surigao Aqua Culture Farms, Inc.. llcd Please be advised that 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 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 corporations may be divided into classes or series of shares, or both, any of which classes or series of shares 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, the 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 restrictions on transfer of shares must be printed in the stock certificates. ( SEC Letter to Mr. Antonio P. Salvador dated April 12, 1994 citing SEC Letter to Ozaeta, Gibbs & Ozaeta, dated October 13, 1994 ) Accordingly, in the absence of an express restriction in the articles of incorporation, a stockholder cannot be prevented from transferring his shares, unless there is a restraining order issued by the Securities Investigation and Clearing Department of this Commission or a proper Court of Justice. LexLib Relative to corporate restructuring, such as increase of subscription, increase of capital stock, merger agreements and other forms of corporate transactions, for as long as the documents pertaining thereto substantially comply with the requirements of the Corporation Code and other pertinent laws, it becomes a ministerial duty of the Commission to give due course to the application, unless there is an objection or case filed pertaining thereto and/or a restraining order issued by the Securities Investigation and Clearing Department of this Commission or a proper Court of Justice. Very truly yours, (SGD.) FE ELOISA C. GLORIA Associate Commissioner