Subject : Nominal Shares

February 5, 2004 SEC OPINION NO. 05-04 Subject : Nominal Shares Ms. Celia M. Gonzalez Director International Operations Department Bangko Sentral ng Pilipinas Manila Dear Ms. Gonzalez, This is in reply to your letter dated January 15, 2004 posing the inquiry stated therein regarding the Opinion issued by the Commission on January 12, 1996, a copy of which is attached. Please be further informed that the SEC Opinion dated January 12, 1996 still stands. "The Supreme Court has acknowledged that nominal ownership in shares is all that is required under Section 23 of the Corporation Code even when it is shown that the registered stockholder is only a nominee or trustee for another person. 1 Further, the Court held that "even when it is shown that the registered owner of shares of stock holds the share in trust for the benefit of the principal, it is necessary nevertheless that the trustee must still endorse the stock certificate to validate the cancellation of her share and to have the transfer recorded in the books of the corporation in favor of the principal or another trustee." 2 Your second query is likewise answered in the affirmative. Considering that the resident Filipino citizen holds the shares only as a nominee for a foreign investor, then such shares should be treated as foreign investment. This, however, is subject to the requirements under the abovequoted rulings. THcEaS Very truly yours, (SGD.) VERNETTE UMALI-PACO General Counsel Footnotes 1. Villanueva, Philippine Corporate Law, 2001, p. 418. 2. Bitong vs. Court of Appeals ,292 SCRA 304 (1998).