Rules to Avoid Delays in the Issuance of Stock Certificate

March 5, 1974 RULES TO AVOID DELAYS IN THE ISSUANCE OF STOCK CERTIFICATE In the public interest and for the purpose of regulating the activities of transfer agents, brokers and clearing houses in connection with the issuance of stock certificates and expedite the release thereof to buyers, the Commission, pursuant to the powers vested in it under existing laws, hereby promulgates the following rules: 1. There shall be Personnel Responsible for Securing Customers' Specimen Signature . Each brokerage firm, clearing house and transfer office shall designate at least one specific employee to take charge of securing, and be the custodian of, customers' specimen signature cards. 2. Clearing House to Report to Stock Exchange Failure of Broker to Make Good Delivery . Every broker shall see to it that firm complies with the rules requiring good deliveries to the clearing house. The clearing house shall report to the corresponding stock exchange within forty-eight (48) hours the failure of any of its members to comply with this requirement. 3. Clearing House to Make Daily Deliveries to Transfer Offices . Every clearing house shall make daily deliveries of transactions to transfer offices, and in no instance shall the deliveries for any day be deferred for the following day. 4. To Indicate Always in Transfer Instructions Complete Name, Address and Citizenship of Buyers . Brokers shall indicate in the transfer instructions, the complete name, address and citizenship of the buyer and not refer to the address and citizenship as "per your transfer agents, records". In case the transfer instruction arise from a split of existing certificate, such fact shall be indicated to properly guide the transfer agent. 5. Notice Necessary When Issuing Stock Certificate in Street Name . When the transfer instructions contained in Form D direct the issuance of the stock certificate in the name of the buyer but he fails to comply with an essential requirement for the purpose, like the non-submission of his specimen signature, the certificate, to facilitate transfers, shall be issued in the name of the brokerage firm. Notice of such fact and the reason for it, however, shall be given immediately by the transfer office to the clearing house or the broker concerned, and confirmed in writing within forty-eight (48) hours to the clearing house. 6. Broker to Index Breakdown of Several Certificates to be Issued . When the transfer instructions direct the issuance of several certificates in the name of one party for the same number of shares, the broker shall index each breakdown with a reference number. When pulling out any of the certificates, the pull-out reference shall contain the index number. Without such indication, the transfer agent shall make the pull-out on the basis of the "first-in-first-out" procedure. 7. DTL to Accompany Stock Power Acknowledged by Transfer Office . Should a broker deliver a stock power and the pull-out reference of this stock power is a direct transfer letter he sent to the transfer office, such stock power must be accompanied by a copy of the direct transfer letter (DTL) to which it relates, acknowledged by the transfer office. LibLex 8. Prior Clearance of Stock Powers to Accompany DTL Necessary . In cases where direct transfer letters (DTL) are accompanied by stock powers, such stock powers should have first been cleared by the respective clearing houses, and such clearance shall be indicated by a stamp on the stock power. No clearance shall be given by the clearing house until after it has forwarded the corresponding Form D to the transfer office. 9. Brokers Shall Endorse Stock Powers . To avoid or minimize return of stock powers which are in the name of buyers but the corresponding certificates might have been issued in street name for lack of certain requirements, brokers shall endorse the stock powers as follows: "ENDORSEMENT OF OWNER GUARANTEED. IN CASE CERTIFICATE IS ISSUED IN OUR NAME, SIGNATURE SERVES AS OUR OWN ENDORSEMENT. Name of Brokerage Firm By: (Duly Authorized Officer) 10. Endorsement Guaranty Means Warranty of Genuineness of Instrument . The term "endorsement of owner guaranteed" or simply "endorsement guaranteed" whether on the stock power or on the stock certificate shall mean a warranty of the genuineness of the stock power or the stock certificate and the endorsement thereon, and the guarantor shall be liable accordingly. * 11. Brokers to Distribute Dividends to Customers Immediately After Receipt . To facilitate the distribution of dividends, whether cash or stock, the transfer office shall make available to every broker not later than twenty-one (21) trading days after the dividend record date the ledger sheets of each broker who may secure a copy thereof from the transfer office. "In the case of cash dividends, the beneficial owners of shares registered in the name of the broker as of the cash dividend record date and the amount of cash dividends to which each such beneficial owner is entitled shall be determined by the broker not later than thirty-one (31) trading days after the dividend record date. Within the same period the broker shall furnish the transfer agent with sworn statements specifying the number of shares that are not subject to withholding tax. The broker shall secure his dividend check from the transfer office on the dividend payment date and shall forthwith distribute the same to his customers, except where the customer has an unpaid account with the broker, in which case, a credit to the customer's account with the proper notice given to him shall constitute prompt delivery of his cash dividend. "In the case of stock dividends, the beneficial owners of shares registered in the name of the broker as of the stock dividend record date and the number of dividend shares to which each such beneficial owner is entitled shall be determined by the broker and a transfer instruction to take effect as at stock dividend distribution date requesting the split of the broker's stock certificate into as many certificates as there are beneficial owners thereof shall be submitted to the transfer office not later than thirty-one (31) trading days after the stock dividend record date and the broker shall secure the certificates, resulting from the split, from the transfer office on the stock dividend distribution date and shall forthwith distribute the same to his customers, except where the customer has an unpaid account with the broker, in which case, the delivery of an "IN" receipt for the stock dividend due the customer shall constitute prompt delivery of his stock dividend. "The stock and transfer books of the corporation which declared the dividend should be closed for not more than thirty-one trading days from the dividend record date." 12. Certificates Already Disposed of Under Stock Powers to be Returned . When certificates covering shares already disposed of under any stock power are received from the transfer office by the clearing house or broker, such certificates shall be returned to the clearing house or transfer, office within two (2) trading days from receipt. 13. Sale of Subscriptions . Whenever a broker effects any sale on behalf of a customer, he must inquire whether or not the shares are covered by duly issued stock certificates. In case there is no stock certificate, he must see to it that the subscription is fully paid for. However, if this could not be ascertained at or before he effects the sale on the board, but later on finds that said subscription has not yet been fully paid by the selling customer, the broker must make the required payment immediately but not later than the second trading day following the transaction. llcd It shall be the duty of the transfer agent to report to the Securities and Exchange Commission within twenty-four (24) hours after he discovers such defect or violation of this rule, and the Commission shall impose upon the broker the penalty provided under paragraph 14 hereof, the violation to be reckoned from the date of the transaction. 14. Penalties . Any violation of the foregoing rules shall be furnished by a fine of P200.00 and an additional sum of not exceeding P100.00 per day for every day, of delay whenever applicable. In serious cases, the suspension or revocation of the license/permit of the guilty party may be imposed, after proper notice and hearing. 15. Repealing Clause . Any rule, regulation or practice contrary to, or in conflict with, any of the foregoing provisions, is hereby repealed or modified accordingly. 16. Effectivity . These rules shall take effect immediately after publication once in two (2) newspapers of general circulation in the Philippines. The rules shall also be published in the Official Gazette. (SGD.) ARCADIO E. YABYABIN Securities and Exchange Commission