Dynetics Incorporated

December 27, 1984 Dynetics Incorporated FTI Complex, Taguig Metro Manila Attention : Virgilio B . Gesmundo Asst . Corporate Secretary Gentlemen: This refers to your letter dated November 27 and April 3, 1984, respectively, requesting the approval of this Commission on your stock dividend declaration. LibLex Anent thereto, please be informed that a declaration of dividend requires the concurrence of two (2) things, namely: (1) unrestricted retained earnings and (2) some formal act of the corporation, declaring the corporate policy of paying a portion or all of such surplus profits to the stockholders. The declaration of stock dividend is well-defined in, and regulated by Section 43 of the Corporation Code of the Philippines, the pertinent provision of which reads as follows: "...The board of directors of a stock corporation may declare dividends out of the unrestricted retained earnings which shall be payable ...in stock to all stockholders on the basis of outstanding stock held by them; ...Provided, further that no stock dividend shall be issued without the approval of the stockholders representing not less than two-thirds (2/3) of the outstanding capital stock at a regular or special meeting duly called for the purpose. xxx xxx xxx." The approval of the Commission is not a requisite for the declaration of stock dividend. (SEC Opinion, dated September 8, 1982). However, pursuant to the rules and regulations implementing P.D. No. 270, promulgated by the Commission on August 3 * , 1973, "any declaration of dividend, whether cash or stock, shall be reported to the Commission within fifteen (15) days from date of declaration; Provided, that in the case of corporations whose securities are listed in any operating stock exchange or registered and licensed under the Securities Act (now the Revised Securities Act), the report shall be filed with the Commission before or simultaneously with the release or publication of the notice of declaration of dividends to stockholders". Your stock dividend declaration appears to be in order it appearing that the corporation has complied with the provisions of Section 43 of the Corporation Code of the Philippines, and it appearing further that the corporation has sufficient retained earnings to cover said stock dividend earlier declared. However, for any future cash or stock dividend declaration, your attention is invited to the provisions of our rules and regulations implementing P.D. 270, hereinabove quoted, as to the period of time within which any such dividend declaration shall be reported to this Commission. Very truly yours, (SGD.) MANUEL G. ABELLO Chairman * Copied verbatim from documents obtained directly from the Securities and Exchange Commission .