May 21, 1996

Mr. Winthrop Wee

Sherwel Enterprises
133 F. Roxas St., Caloocan City
Zip Code 1400
Sir:
This refers to your letter dated May 17, 1996 requesting clarification on
whether a corporation can hold fractional shares resulting from a declaration of stock
dividend by not releasing or distributing it in a form of cash or otherwise.
A corporation may, pursuant to Section 41 of the Corporation Code, purchase
or acquire fractional shares arising out of a stock dividend declaration, provided that it
has the necessary unrestricted retained earnings in its books to cover the shares to be
purchased or acquired. Under this situation the corporation should pay the owner of
the fractional share the cash value thereof. In the absence of unrestricted retained
earnings, fractional scrip certificates, which will entitle the stockholders owning the
fractional shares to the payment of the cash value thereof when the company is in a
position to do so, may be issued to them instead of stock certificates covering such
fractional shares; or the stockholders concerned negotiate for the sale or purchase of
their fractional shares with the other stockholders also owning fractional shares, so as
to convert them into full shares. (SEC opinion dtd. August 1, 1961 addressed to
Republic Telephone Company(1))
llcd

Very truly yours,

(SGD.) FE ELOISA C. GLORIA
Associate Commissioner

Copyright 1994-2013

CD Technologies Asia, Inc.

Securities and Exchange Commission 2012

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Endnotes
1 (Popup - Popup)

SEC Opinion addressed to Republic Telephone Company, dated August 1, 1961,

was not available at the time of publication.

Copyright 1994-2013

CD Technologies Asia, Inc.

Securities and Exchange Commission 2012

PDF created with pdfFactory Pro trial version www.pdffactory.com