Atty. Conchitina Gregorio-Panganiban

December 8, 1997 Atty. Conchitina Gregorio-Panganiban Philippine Stock Exchange, Phil. Stock Exchange Centre Exchange Road, Ortigas Center, Pasig City Madam: This refers to your letter dated October 20, 1997 seeking clarification on the proper interpretation as to what constitutes "public ownership" for purposes of complying with the listing qualifications/requirements under the PSE Manual of Rules Governing the Listing of Securities. llcd Please be advised that for purposes of registration under the Revised Securities Act (RSA), there is no required number of stockholders for a corporation " intending to go public " to qualify for registration. Be that as it may, as a rule of thumb, the Commission considers the sale of securities to 20 or more persons as selling to the public. However, under Sec. 6(b) of the RSA, such transaction may be exempted from registration if the registration thereof is not necessary in the public interest and for the protection of the investors by reason of the small amount involved or the limited character of the public offering. A corporation may have twenty (20) or more stockholders, but they may all be close business associates or high net worth individuals or institutional investors who are in a position to know the present affairs of the corporation such that registration under the RSA is not necessary for their protection. Further, the provisions RSA Rules 11(a)-1 and Rule 48-1 which are applicable to corporations with 200 or more stockholders each holding at least 100 shares are only for purposes of reportorial requirement, not for registration purposes. However, while there is no required minimum number of stockholders/public ownership for purposes of registration under the RSA, the Philippine Stock Exchange (PSE) is authorized to adopt its own rules and regulations governing the listing of securities in the Exchange. It is advised however that the PSE Rules should be construed in the manner that will carry out the established policy of both the SEC and PSE to ensure the maximum distribution of shares of listed companies so as to give the general public an opportunity to participate more actively in the stock market. Very truly yours, (SGD.) PERFECTO R. YASAY, JR. Chairman