Ponce Enrile Reyes & Manalastas

May 5, 1997 Ponce Enrile Reyes & Manalastas 3RD Flr. Vernida Bldg., Alfaro St. Salcedo Village, 1227 City of Makati Attention : Attys . Jesus M . Manalastas and Regina Maria S . Riel Gentlemen : This refers to your letter dated April 24, 1997 requesting for confirmation that the offering and sale of common and preferred shares in the Philippines by a foreign corporation, EAGA Strategic Investment Fund, Ltd. (ESIF) under the facts stated therein is not covered by Section 4 of the Revised Securities Act as it intends to offer and sell the shares only to sophisticated or large institutional investors. While under the Revised Securities Act, selling or offering for sale or distribution of securities within the Philippines, as a general rule, is subject to registration, the same Law, allows exemptions by reason of the small amount or limited character of the offering . The pertinent provisions of the Revised Securities Act of the Philippines provide thus: "SECTION 4. Requirement of registration of securities . (a) No securities except of a class exempt under any of the provisions of Section five thereof or unless sold in any transaction exempt under any of the provisions of Section six hereof, shall be sold or offered for sale or distribution to the public within the Philippines unless such securities shall have registered and permitted to be sold as hereinafter provided." (Emphasis supplied) "SECTION 6. Exempt transactions . . . . xxx xxx xxx. (b) The Commission may, from time to time and subject to such terms and conditions as it may prescribe, exempt transactions other than those provided in the preceding paragraph, if it finds that enforcement of the requirements of registration under this Act with respect to such transactions 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 ." (Emphasis supplied) Accordingly, if it can be shown that the offering will be limited only to a few institutional investors who are in the position to know the present affairs of the foreign company and the risk of investing therein such that the registration of the securities to be offered is unnecessary for the protection of the investors, the transaction may be exempted from the registration requirements under the Revised Securities Act, but only after complying with the following: 1. A certificate of exemption shall be secured by filing a request for exemption from the registration requirements stating the reasons why it should be exempted under Section 6(b) of the Revised Securities Act; 2. Payment of exemption fee equivalent to one-tenth of one percentum of the maximum aggregate price or issued value of the shares, to be sold as required under Section 6(c) of the Revised Securities Act; LexLib and provided further that: 3. It shall not operate as an "investment company" in the Philippines as defined under RA 2629, otherwise known as the Investment Company Act. Very truly yours, (SGD.) FE ELOISA C. GLORIA Associate Commissioner