Col. Daniel V. dela Cruz

April 11, 1980 Col. Daniel V. dela Cruz 1147 Pasong Tamo Makati, Metro-Manila Sir : This has reference to your letter dated March 24, 1980, seeking information on the lines of action a domestic mining company may take to increase its capitalization by taking in foreign investors and at the same time retain the management of the corporation. To retain control of the management of the corporation, the shares of stock should be reclassified into two classes: the common shares and the preferred, non-voting shares issuable to foreign investors. These preferred non-voting shares shall confer upon the owners thereof privileges or preferences not enjoyed by the owners of the common shares so as to make them attractive to foreign investors. These preferences may consist in the distribution of a fixed percentage of dividends to the holders of preferred shares before any dividend can be paid to the holders of common stock as well as preference as to the distribution of the assets of the corporation upon dissolution to the extent of the par value of the preferred shares together with all the accrued dividends. Furthermore, the dividends may be made cumulative and participating. Cumulative, i.e., if the profits in any year are not enough to pay the preferred dividends the deficiency is made up from the profits of the subsequent year before dividends can be paid to the holders of the common stock. Participating the holders of preferred shares are made to participate with the holders of common shares in the excess profits of the corporation in addition to the preferred minimum. However, in this connection, please be informed that if the alien equity exceeds 30%, the same should first be approved by the Board of Investments. Please be guided accordingly. Very truly yours, For the Chairman: (SGD.) ROSARIO N. LOPEZ Director Corporate and Legal Department