Deputy Governor Carlota P. Valenzuela

October 21, 1983 Deputy Governor Carlota P. Valenzuela Central Bank of the Philippines Manila Madam: This refers to your letter dated December 10, 1982 and June 16, 1983 relative to the following: 1. Whether or not it is judicious on the part of Non-Bank Financial Intermediaries (NBFI) to accept capital contributions in the form of proprietary shares, and, if so, 2. What bases are used in setting up the value of such form of capital. In connection therewith, please be informed that the law allows payment of subscription in the form of property, Section 62 of the Corporation Code, provides, thus: "SECTION 62. Consideration of * stocks ....Consideration for the issuance of stock may be any or a combination of any two or more of the following: xxx xxx xxx 2. Property ,tangible or intangible, actually received by the corporation and necessary or convenient for its use and lawful purposes at a fair valuation equal to the par or issued value of the stock issued. (emphasis supplied) xxx xxx xxx" However, the present policy of the Commission is to require financing companies to put up substantial cash paid up capital of 2 Million for Metro Manila and 1 Million for areas outside Metro Manila, and not to allow non-liquid property to be used as initial capital for purposes of incorporation. After incorporation, property may be accepted as capital contribution in accordance with the above-cited provisions of the law, provided the same is necessary or convenient for the use of the corporation. In the valuation of proprietary shares, the Commission, thru the Examiners and Appraisers Department uses the following as basis: LexLib 1. If the resort or country club concerned is still in its development stage, the issue value of such shares, as authorized by the Commission in the covering SEC permit, is used. This is premised on the concept that resort and country club still raising funds for the development of the facilities thru the sale of their proprietary shares are prohibited to sell their shares below or above the price authorized by the Commission. 2. When the resort or country club concerned has been granted a certificate of completion, the current market value or in the absence thereof, the latest book value. Please be guided accordingly. Very truly yours, (SGD.) MANUEL G. ABELLO Chairman * Copied verbatim from documents obtained directly from the Securities and Exchange Commission .