Atty. Victor Africa

May 21, 1991 Atty. Victor Africa Telecoms Plaza 316 Gil J. Puyat Avenue Salcedo Village, Makati Metro Manila S i r : This refers to your letter of April 3, 1991, requesting opinion on the following queries relative to the applicability of the provisions on "restriction of transfer of shares." 1. Would they apply to transfers to previously undisclosed principals or beneficiaries? When one subscribes for shares in his name for undisclosed real owner without any description in the corporate books that he holds the stocks merely as agent or trustee, he is liable to the same extent as if he had taken them in his own name and it shall be presumed that he is investing in his own personal capacity . Therefore, he cannot evade compliance with the terms and conditions of his subscriptions. In such a case, the restriction will apply. 2. Would they apply to transfers of shares denominated by the transferor as qualifying shares, "where there is no acknowledgment by the transferee that he is getting them "in trust" for the transferor? The Commission, in a letter dated February 12, 1985 addressed to PEFTOK Integrated Services, Inc ., previously ruled that if the purpose of the transfer of the stock is only to qualify the transferee for the election in the Board of Directors without giving him the beneficial ownership thereof, the transfer is not violative of the transfer restriction clause in the articles of incorporation. Said transfer would be more of a trust and not a transfer of ownership. In this particular case, the transferee should be described in the corporate books and certificate to be issued merely as nominee or trustee of the transferor. The notation shall serve as notice to both the corporation and third parties that the transferee only holds the share as nominee for the benefit of the real owner. Accordingly, your second query is answered in the negative. 3. Would they apply to subsequent transfers of shares previously denominated as "qualifying shares"? For as long as the purpose of the subsequent transfer of the share is only to qualify the transferee to the Board of Directors without transferring the beneficial ownership thereof and the share continue to be denominated and recorded in the corporate books as qualifying share, the transfer restriction clause in the articles of incorporation will not apply. Please be advised accordingly. Very truly yours, (SGD.) ROSARIO N. LOPEZ Chairman