Maranaw Hotels & Resort Corporation

September 6, 1983 Maranaw Hotels & Resort Corporation Vito Cruz cor. M. Adriatico Malate, Manila Gentlemen: This has reference to your letter dated August 29, 1983, requesting for opinion on the queries posed therein. FACTS : 1. "A" Corporation is a domestic corporation organized on the basis of a 60% (Class A) 40% (Class B) capital structure. 2. Its Articles of Incorporation a) Restricts the issuance of Class A Stock only to Filipinos within the purview of applicable Philippines laws. b) Provides that the total number of Class B stock issued and outstanding shall in no case exceed four-sixth (4/6) of the total number of Class A stock then issued and outstanding. c) Entitles both Class A and Class B stocks to the same rights and privileges except paragraph a). 3. Its organization on a 60% (Class A) 40% capital structure has qualified it to be a Philippine national within the applicable laws which grant certain incentives. Short of this percentage, it will lose its status as a Philippine National and will amount to a violation of the provisions of its Articles disallowing or nullifying transfer of stock which will reduce the ownership of Filipino nationals to less than the required percentage. 4. Its issued and outstanding shares of stock amount to P460M out of a total authorized capital stock of P500M, held by the following stockholders: CLASS OF STOCK NAME CITIZENSHIP "A" "B " TOTAL "X" Corporation Fil. P249M P85M P334M "Y" Corporation Fil. 27M 0 27M "Z" Corporation Fil. 4M 0 4M "C" Corporation Jap. 0 95M 95M P280M P180M P460M (60.87%) (39.13%) Transaction Contemplated : "Z" Corporation desires to exchange its Class "A" shares amounting to P4M for Class "B" shares from the unissued shares of the corporation. Thereafter "C" Corporation shall purchase "Z" Corporation's Class "B" shares. Consequently, Class "A" shares will now be 60% and B, 40% of the total issued and outstanding shares. As a consequence of the above transactions, the new capital structure of "A" Corporation will now be: CLASS OF STOCK NAME CITIZENSHIP A B TOTAL "X" Corporation Fil. P249M P85M P334M "Y" Corporation Fil. 27M 0 27M "C" Corporation Jap. 0 99M 99M Total P276M P184M P460M (60%) (40%) Question : Would the aforementioned transactions contemplated be valid inasmuch as it will result in a 60% (Class A) 40% (Class B) capital structure? Considering that the transaction will result similarly in 60% (Class A) 40% (Class B) capital structure as required by the Articles of Incorporation of the corporation, the Commission will not interpose any objection thereto if no stockholders or creditors will be prejudiced. Very truly yours, (SGD.) GONZALO T. SANTOS, JR. Associate Commissioner