KTRL Comm Reviewer
KTRL Comm Reviewer
KTRL Comm Reviewer
Petition for the approval of a pre- Rehabilitation receiver shall refer to the person
negotiated Rehabilitation Plan: or persons, natural or juridical, initially
nominated by the petitioner, whether by the
The court shall have a maximum period creditor or the debtor, as the case may be, and,
of one hundred twenty (120) days from thereafter, appointed as such by the court
the date of the filing of the petition to which shall be entrusted with such powers and
approve the Rehabilitation Plan. If the duties as set forth herein. Any creditor or debtor
court fails to act within the said period, may also nominate a rehabilitation receiver per
the Rehabilitation Plan shall be the appropriate Commencement Order issued
deemed approved. by the court.
(b) There is sufficient monitoring by the (g) The debtor has not committed acts
rehabilitation receiver of the debtor's business misrepresentation or in fraud of its creditor/s or
for the protection of creditors; a group of creditors.
(c) The debtor has met with its creditors to the Stay or Suspension Order – It is an order
extent reasonably possible in attempts to reach included in the Commencement Order and has
consensus on the proposed Rehabilitation Plan; the following effects: 1) it suspends all actions
or proceedings, in court or otherwise, for the
(d) The rehabilitation receiver submits a report, enforcement of claims against the debtor,
based on preliminary evaluation, stating that including execution and enforcement of any
the underlying assumptions and the goals judgment, attachment, or other provisional
stated in the petitioner's Rehabilitation Plan are remedies against the debtor; 2) it prohibits the
realistic reasonable and reasonable or if not, debtor from disposing any of its properties
there is, in any case, a substantial likelihood for except in the ordinary course of business, and
the debtor to be successfully rehabilitated payment of liabilities outstanding as of the
because, among others:
2
However, it shall not apply to: 1) cases already Minimum Contents of a Rehabilitation Plan:
pending appeal with the Supreme Court as of (a) financial goals and the procedures to
the Commencement Date; 2) cases pending at accomplish such goals;
a specialized court or quasi-judicial agency
which, upon determination by the court, is (b) comparison of the amounts expected to be
capable of resolving the claim more quickly, received by the creditors under the
fairly and efficiently than the court; 3) Rehabilitation Plan with those that they will
enforcement of claims against sureties and receive if liquidation ensues within the next one
other persons solidarily liable with the debtor, hundred twenty (120) days;
unless the property subject of a third party or
accommodation mortgage is necessary for he (c) contain information sufficient to give the
rehabilitation as recommended by the various classes of creditors a reasonable basis
rehabilitation receiver; 4) any action for determining whether supporting the Plan is
commenced for or against debtors which are in their financial interest when compared to the
securities market participant for the recovery or immediate liquidation of the debtor, including
settlement of money claims and/or securities any reduction of principal interest and penalties
entrusted by clients to the former in the ordinary payable to the creditors;
course of business; 5) any action involving
pledged securities of a debtor for the settlement (d) establish classes of voting creditors;
of securities transactions; 6) clearing and
settlement of financial transactions of the (e) establish subclasses of voting creditors if
debtor and actions for the reimbursement of the prior approval has been granted by the court;
same; 7) criminal actions against the debtor.
(f) indicate how the insolvent debtor will be
Any final and executory judgment arising from rehabilitated including, but not limited to, debt
cases 1) and 2) shall be referred to the forgiveness, debt rescheduling, reorganization
rehabilitation court for appropriate action. The or quasi-reorganization. dacion en pago, debt-
judgment from said quasi judicial agencies or equity conversion and sale of the business (or
special courts shall be treated as non-disputed parts of it) as a going concern, or setting-up of
claim. a new business entity or other similar
arrangements as may be necessary to restore
Commencement date shall refer to the date on the financial well-being and visibility of the
which the court issues the Commencement insolvent debtor;
Order, which shall be retroactive to the date of
filing of the petition for voluntary or involuntary (g) specify the treatment of each class or
proceedings. subclass described in subsections (d) and (e);
Rehabilitation Plan shall refer to a plan by which (h) provide for equal treatment of all claims
the financial well-being and viability of an within the same class or subclass, unless a
insolvent debtor can be restored using various particular creditor voluntarily agrees to less
means including, but not limited to, debt favorable treatment;
forgiveness, debt rescheduling, reorganization
or quasi-reorganization, dacion en pago, debt- (i) ensure that the payments made under the
equity conversion and sale of the business (or plan follow the priority established under the
parts of it) as a going concern, or setting-up of provisions of the Civil Code on concurrence and
new business entity as prescribed in Section 62 preference of credits and other applicable laws;
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(k) disclose all payments to creditors for pre- (v) state the compensation and status, if any, of
commencement debts made during the the rehabilitation receiver after the approval of
proceedings and the justifications thereof; the Plan; and
(1) describe the disputed claims and the (w) contain provisions for conciliation and/or
provisioning of funds to account for appropriate mediation as a prerequisite to court assistance
payments should the claim be ruled valid or its or intervention in the event of any disagreement
amount adjusted; in the interpretation or implementation of the
Rehabilitation Plan.
(m) identify the debtor's role in the
implementation of the Plan; Insolvency – This is not presumed in the point
of view of the debtor. Determination of
(n) state any rehabilitation covenants of the insolvency is a court function. A debtor shall
debtor, the breach of which shall be considered have to file a petition first with the court, and the
a material breach of the Plan; court shall be the one which shall declare the
insolvency of the debtor. It is determined after
(o) identify those responsible for the future hearing and after the rehabilitation receiver
management of the debtor and the supervision submitted his report. A debtor is either insolvent
and implementation of the Plan, their affiliation or not, and if so declared, a debtor shall either
with the debtor and their remuneration; be up for rehabilitation or liquidation.
(p) address the treatment of claims arising after It is the primary consideration for a petition for
the confirmation of the Rehabilitation Plan; rehabilitation to prosper. Whether involuntary or
voluntary proceedings, it is the main goal of the
(q) require the debtor and its counter-parties to petitioner: to declare the debtor insolvent.
adhere to the terms of all contracts that the Because if it is not found to be insolvent, then
debtor has chosen to confirm; the court may, in its discretion, order the
petitioner to pay damages to any creditor or to
(r) arrange for the payment of all outstanding the debtor, as the case may be, who may have
administrative expenses as a condition to the been injured by the filing of the petition, to the
Plan's approval unless such condition has been extent of any such injury.
waived in writing by the creditors concerned;
Here are the grounds for the petition for
(s) arrange for the payment" of all outstanding involuntary rehabilitation: 1) the debtor has
taxes and assessments, or an adjusted amount failed generally to meet its liabilities as they fall
pursuant to a compromise settlement with the due; or, 2) there is a prior foreclosure
BlR Or other applicable tax authorities; proceedings initiated, other than by the
petitioners, against the debtor that will prevent
(t) include a certified copy of a certificate of tax the latter from paying its debts as they become
clearance or evidence of a compromise due.
settlement with the BIR;
Sections 31–41 is about the rehabilitation
receiver. Generally, the power of the
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rehabilitation receiver is like a trustee but it Failure to timely file a claim renders a creditor
cannot directly manage the business of the barred from participation in the hearing and any
debtor unless such assumption is directed by subsequent proceeding. Even if one belatedly
the court. filed, they shall only be entitled to receive the
distributions which will arise from the
Sections 42-43 talks about Creditors’ rehabilitation proceeding.
Committee.
OR
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The court may refer any dispute relating to the If no Rehabilitation Plan is confirmed within the
Rehabilitation Plan or the rehabilitation required period, the proceedings may upon
proceedings pending before it to arbitration or motion or motu propio, be converted into one
other modes of dispute resolution, as provided for the liquidation of the debtor.
for under Republic Act No. 9285, Or the
Upon confirmation of the Rehabilitation Plan,
Alternative Dispute Resolution Act of 2004, the rehabilitation receiver shall provide a final
should it determine that such mode will resolve
report and accounting to the court. Unless the
the dispute more quickly, fairly and efficiently
Rehabilitation Plan specifically requires and
than the court. describes the role of the rehabilitation receiver
after the approval of the Rehabilitation Plan, the
If not so referred, it shall schedule a conference
court shall discharge the rehabilitation receiver
with the debtor and all classes of creditors, and of his duties.
may consider their views and proposals ill the
review, revision or preparation of the new
11.) Termination of Proceedings upon motion
Rehabilitation Plan, if any. by any stakeholder or the rehabilitation receiver
through a court order either declaring a
9.) Rehabilitation Receiver shall notify creditors
successful implementation of the Rehabilitation
and schedule an election for the approval of Plan or a failure of rehabilitation.
Rehabilitation Plan.
If approved, it shall be submitted to the court for There is failure of rehabilitation in the
confirmation following cases: (a) Dismissal of the petition by
the court; (b) The debtor fails to submit a
In case of disapproval, it may be “vetoed” by the Rehabilitation Plan; (c) Under the Rehabilitation
court if: Plan submitted by the debtor, there is no
substantial likelihood that the debtor can be
(a)The Rehabilitation Plan complies with the rehabilitated within a reasonable period; (d) The
requirements specified in this Act. Rehabilitation Plan or its amendment is
approved by the court but in the implementation
(b) The rehabilitation receiver recommends the
thereof, the debtor fails to perform its
confirmation of the Rehabilitation Plan; obligations thereunder or there is a failure to
realize the objectives, targets or goals set forth
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SECTION 10. The Congress shall, upon SECTION 17. In times of national emergency,
recommendation of the economic and planning when the public interest so requires, the
agency, when the national interest dictates, State may, during the emergency and under
reserve to citizens of the Philippines or to reasonable terms prescribed by it, temporarily
corporations or associations at least 60% of take over or direct the operation of any
whose capital is owned by such citizens, or privately owned public utility or business
such higher percentage as Congress may affected with public interest.
prescribe, certain areas of investments xx xx
xx SECTION 18. The State may, in the interest of
national welfare or defense, establish and
In the grant of rights, privileges, and operate vital industries and, upon payment of
concessions covering the national economy just compensation, transfer to public
and patrimony, the State shall give ownership utilities and other private
preference to qualified Filipinos. enterprises to be operated by the
Government. (EMINENT DOMAIN ON
The State shall regulate and exercise BUSINESS OWNERSHIP)
authority over foreign investments within its
national jurisdiction and in accordance with
its national goals and priorities.
FIA Negative List (Foreign Investments Act following, according to the National Economic
of 1991 and other related laws plus the and Development Authority (NEDA):
Constitution)
Internet businesses;
The term "Foreign Investments Negative List" Teaching at higher education levels provided
or "Negative List" shall mean a list of areas of the subject being taught is not a professional
economic activity whose foreign ownership is subject;
limited to a maximum of forty percent (40%) of Training centers that are engaged in short-
the equity capital of the enterprise engaged term high level skills development that do not
therein form part of the formal education system;
Adjustment companies, lending companies,
As a general rule, there are no restrictions on financing companies, and investment houses;
extent of foreign ownership of export Wellness centers
enterprises. In domestic market enterprises,
foreigners can invest as much as one hundred
percent (100%) equity except in areas LIST A: FOREIGN OWNERSHIP IS LIMITED
included in the negative list. BY MANDATE OF THE CONSTITUTION AND
SPECIFIC LAWS
Export Businesses - An export enterprise is
defined as a business who exports at least 60%
of its output. No Foreign Equity (0%)
Export Business Enterprises may be 100% fully 1. Mass Media except recording (Art. XVI,
foreign owned and may file with the SEC for an Sec.11 of the Constitution; Presidential
exemption of the paid-up capital requirement of Memorandum dated 04 May 1994)
USD 200,000.00.
KPO, BPO, Back Office, IT, Web Development 2. Practice of all professions *1 (Art. XII,
and call centers are all considered Philippines Sec.14 of the Constitution, Sec. 1 of R.A. 5181,
Export Enterprises. Sec. 7. J of R.A. 8981)
Foreign Investments in Domestic Market The following are expressly disallowed by law
Enterprises. - Non-Philippine nationals may for practice by foreigners
own up to one hundred percent (100%) of
domestic market enterprises unless foreign a. Pharmacy (R.A. 5921)
ownership therein is prohibited or limited by b. Radiologic and x-ray technology (R.A. 7431)
existing law or the Foreign Investment Negative c. Criminology (R.A. 6560)
List under Section 8 hereof. d. Forestry (R.A. 6239)
e. Law (Art. VIII, Section 5 of the Constitution;
A domestic market enterprise may change its Rule 138, Sec. 2 of the Rules of the Court of the
status to export enterprise if over a three (3) Philippines
year period it consistently exports in each year
thereof sixty per cent (60%) or more of its output. Foreigners are allowed to practice the following
professions provided their country allows
Filipinos to be admitted to the practice of these
professions: ENGINEERING ARCHITECTURE
related profession, MEDICINE related
profession, accountancy, architecture,
The 5 investment areas and activities that can chemistry, customs brokerage, environmental
now be 100% owned by foreigners are the planning, geology, landscape architecture,
10
librarianship, marine deck officers, marine is a signatory and conventions supported by the
engine officers, master plumbing, sugar Philippines)
technology, social work, teaching, agriculture,
fisheries, guidance counseling, REAL ESTATE Domestic Investments for distribution of
SERVICE related profession, respiratory weapons of destruction are also prohibited (Art.
therapy, psychology, real estate service, and II, Sec. 8 of the Constitution;
interior design allow corporate practice by Conventions/Treaties to which the Philippines
Filipinos. is a signatory).
3. Retail trade enterprises with paid-up 11. Manufacture of firecrackers and other
capital of less than US$2,500,000 (Sec. 5 of pyrotechnic devices (Sec. 5 of R.A. 7183)
R.A. 8762)
Full foreign participation is allowed for retail Up to Twenty Percent (20%) Foreign Equity
trade enterprises: (a) with paid-up capital of
US$2,500,000 or more provided that 12. Private radio communications network
investments for establishing a store is not (R.A. 3846)
less than US$830,000; or (b) specializing in
high end or luxury products, provided that
the paid-up capital per store is not less than Up to Twenty –Five Percent (25%) Foreign
US$250,000 (Sec. 5 of R.A. 8762). Equity
4. Cooperative (Ch. III, Art. 26 of R.A. 6938) 13. Private recruitment, whether for local or
overseas employment (Art. 27 of P.D. 442)
5. Private security agencies (SEC. 4 of R.A.
5487) 14. Contracts for the construction and repair
of locally-funded public works (Sec. 1 of
6. Small-scale mining (Sec. 3 of R.A. 5487) Commonwealth Act No. 541, Letter of
Instruction No. 630) except:
7. Utilization of marine resources in
archipelagic waters, territorial sea, and a. Infrastructure/development projects covered
exclusive economic zone as well as small- in R.A. 7718 (Sec. 2); and,
scale utilization of natural resources in
rivers, lakes, bays, and lagoons (Art. XII, Sec. b. Projects which are foreign funded or
2 of the Constitution) assisted and required to undergo
international competitive bidding (Sec. 2(a)
EXCEPT DEEP SEA COMMERCIAL FISHING of R.A. 7718)
8. Ownership, operation and management of 15. Contracts for the construction of defense
cockpits (Sec. 5 of P.D. 449) related structures (Sec. 1 of CA 541)
Lending companies regulated by SEC are 20. Educational institutions other than those
allowed to have up to 49% foreign equity established by religious groups and
participation (Sec. 6 of R.A. 9474). Financing mission boards (Art. XIV, Sec. 4 of the
companies and investment houses regulated Constitution)
by SEC are allowed to have up to 60% foreign
equity participation (Sec. 6 of R.A. 5980 as Control and administration of educational
amended by R.A. 8556; P.D. 129 as amended institutions shall be vested in citizens of the
by R.A. 8366). Philippines (Art. XIV, Sec. 4(2) of the
Constitution).
17. Exploration, development and utilization
of natural resources (Art. XII, Sec. 2 of the Teaching at higher education levels provided
Constitution) the subject being taught is not a professional
Full foreign participation is allowed through subject are now allowed 100% foreign;
financial or technical assistance agreement Training centers that are engaged in short-term
with the President (Art. XII, Sec. 2 of the high level skills development that do not form
Constitution) part of the formal education system are now
allowed 100% foreign;
18. Ownership of private lands (Art. XII, Sec.
7 of the Constitution; Ch. 5, Sec. 22 of CA 141; 21. Culture, production, milling, processing,
Sec. 4 of R.A. 9182) trading excepting retailing, of rice and corn
and acquiring, by barter, purchase or otherwise,
A corporation held by 60% Filipino is qualified rice and corn and the by-products thereof (Sec.
to own lands of public domain (alienable lands, 5 of P.D. 194)
agricultural lands).
Full foreign participation is allowed provided
19. Operation of public utilities (Art. XII, Sec. that within the 30-year period from start of
11 of the Constitution; Sec. 16 of CA 146) operation, the foreign investor shall divest a
minimum of 60 percent of their equity to
The participation of foreign investors in the Filipino citizens (Sec. 5 of P.D. 194; NFA
governing body of any public utility enterprise Council Resolution No. 193 s. 1998).
shall be limited to their proportionate share in its
capital, and all the executive and managing 22. Contracts for the supply of materials,
officers of such corporation or association be goods and commodities to government-
citizens of the Philippines (Article XII, Section owned or controlled corporation, company,
11 of the Constitution). agency or municipal corporation (Sec. 1 of
R.A. 5183)
A “public utility” is a business or service
engaged in regularly supplying the public 23. Facility operator of an infrastructure or a
with some commodity or service of development facility requiring a public
consequence such as electricity, gas, water, utility franchise (Art. XII, sec. 11 for the
transportation, telephone or telegraph Constitution; Sec. 2 (a) of R.A. 7718)
service (Supreme Court ruling JG Summit
Holdings vs. Court of Appeals, et al., 24. Operation of deep sea commercial
September 24, 2003). Power generation and fishing vessels (Sec. 27 of R.A. 8550)
the supply of electricity to the contestable
market are not considered as public utility 25. Adjustment Companies (Sec. 332 of R.A.
operation (Sec. 6 and Sec. 29, respectively of 10607 amending P.A. 612)
R.A. 9136).
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5. All forms of gambling (R.A. 7042 as However, the phrase "doing business” shall not
amended by R.A. 8179) except those covered include:
by investment agreements with PAGCOR
(P.D. 1869 as amended by R.A. 9487) a) Mere investment, as a shareholder, in
domestic corporations;
6. Small and medium-sized Domestic market b) Exercise of investor’s rights;
enterprises with paid-in equity capital at c) Nomination of officer to represent its interests;
least in the equivalent of US$200,000 (R.A. d) Appointment of representative or distributor
7042 as amended by R.A. 8179) which transacts business in its own name and
for its own account.
7. Domestic market enterprises which
involve advanced technology or employ at “Export enterprise" means an enterprise
least fifty (50) direct employees with paid-in wherein a manufacturer, processor or service
equity capital at least in the equivalent of [including tourism] enterprise exports sixty
US$100,000 (R.A. 7042 as amended by R.A. percent (60%) or more of its output, or wherein
8179) a trader purchases products domestically and
exports sixty per cent (60%) or more of such
purchases
IMPORTANT MATTERS: “Domestic market enterprise" shall mean an
enterprise which produces goods for sale, or
A "Philippine national" is a Filipino Citizen. It is renders services to the domestic market
also a domestic partnership, association, or entirely or if exporting a portion of its output fails
corporation registered in the Philippines and to consistency export at least sixty percent
“Filipino owned”. A Filipino owned company is (60%) thereof.
one which 60% of its outstanding capital stock
entitled to vote, or a trustee of funds 60% of "Foreign Investments Negative List" or
which, is held by Filipinos and at least 60% of "Negative List" shall mean a list of areas of
its Board of Directors are Filipinos. economic activity whose foreign ownership is
limited to a maximum of forty percent (40%) of
"Doing business" generally means performance the equity capital of the enterprise engaged
of acts implying continuity of commercial therein.
dealings or arrangements, and contemplate to
that extent the performance of acts or works, or
the exercise of some of the functions normally
incident to, and in progressive prosecution of,
commercial gain or of the purpose and object of Former natural born citizens of the Philippines
the business organization. The term includes: shall have the same investment rights of a
Philippine citizen in Cooperatives, Rural Banks,
1) Soliciting orders, service contracts, opening Thrift Banks and Private Development Banks,
offices, whether called "liaison" offices or and Financing Companies.
branches;
2) Appointing representatives or distributors Said Investment rights shall not extend to
domiciled in the Philippines, or although not activities reserved by the Constitution, including
domiciled, nonetheless stayed within the [1] the exercise of profession: [2] in defense-
Philippines for a period of 180 days or more; related activities, unless specifically authorized
3) Participating in the management, supervision by the Secretary of National Defense: and, [3]
or control of any domestic business, firm, entity activities covered by the Retail Trade Act,
or corporation in the Philippines; Security Agency Act, Small Scale Mining Act,
14
Rice and Corn Industry Act, and Cockpits must be citizens of the Philippines, in order that
Operation and Management. the corporation, shall be considered a
"Philippine national."
Any natural-born citizen who has lost his
Philippine citizenship and who has the legal
capacity to enter into a contract under
Philippine laws may be a transferee of a private
land up to a maximum area of 5,000 sq. m. of
urban land, or 3 hectares of rural land, at the
maximum of 2 lots. A transferee who has
already acquired urban land shall be
disqualified from acquiring rural land and vice
versa.
2a) Disclosure Requirements in Tender Offers No tender offer shall be made unless: It is open
to all security holders of the class of securities
The Offeror shall publish, send or give to subject to the tender offer; and, the amount of
security holders in the manner prescribed by consideration paid to any security holder
SRC Rule 19.9, a report containing the pursuant to the tender offer shall be the
following information: highest consideration paid to any other
security holder during such tender offer.
The identity of the Offeror including his
or its present principal occupation or Offer price must be the highest price paid by
business; him for such securities within 6 months prior the
The identity of the target company; commencement date.
The amount of class of securities being
sought and the type and amount of
consideration being offered; The Offeror shall not extend the period of a
The scheduled expiration date of the tender offer without prior clearance from the
tender offer, whether the tender offer Commission and without issuing a notice of
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such extension by publication in a national "Tender offer materials" mean: (i) the Offeror's
newspaper of general circulation. The notice formal offer, including all the material terms
shall include a disclosure of the number of and conditions of the tender offer and all their
securities deposited to date and shall be made amendments; (ii) the related transmittal letter
public not later than the scheduled original (whereby equity securities of the target
expiration date of the offer. company that are sought in the tender offer may
be transmitted to the Offeror or its depository)
2b) Dissemination Requirements and all their amendments; and (iii) press
releases, advertisements, letters and other
An Offeror or Issuer shall publish the terms and documents published by the Offeror or sent
conditions of the tender offering in two (2) or given by the Offeror to security holders which,
national newspapers of general circulation in directly or indirectly, solicit, invite or request
the Philippines on the date of tenders of the equity securities being sought in
commencement of the tender offer and for the tender offer.
two (2) consecutive days after compliance
with the disclosure requirement. "Commencement" means the date a tender
(CONTEMPORANEOUS with the copy offer is first published, sent or given to security
furnishing of tender offer & disclosure) holders.
If a material change occurs in the information "Issuer Tender Offer" means a publicly
published, sent or given to security holders, the announced intention by an Issuer to reacquire
Offeror shall disseminate promptly a disclosure any of its own class of equity securities, or by
of such change in a manner reasonably an associate of such Issuer to acquire such
calculated to inform security holders of such securities.
change.
2b) Period and Manner of Making Tender "Termination" means the date after which
Offers equity securities may not be tendered pursuant
to the tender offer.
A tender offer shall, unless withdrawn, remain
open until the expiration of: Public company means any corporation with a
class of equity securities listed on an Exchange,
i) Within 20-60 business days from or with assets in excess of PhP 50,000,000.00
commencement date. and has 200 or more holders each holding at
ii) Within 10 business days from notice of least 100 shares of a class of its equity
change, or notice of amendment if any, to 60 securities.
business days from commencement date.
Exchange is an organized marketplace or
3) File additional tender offer materials, plus facility that brings together buyers and sellers,
amendments, if any (again, do number 2); and executes trades of securities and/or
commodities.
4) Report the result of tender offer to the
SEC, within 10 days after the termination of the
tender offer, plus filing copies of final
amendments, if any.
IMPORTANT MATTERS
17
18
PHILIPPINE ECONOMIC ZONE AUTHORITY Since non-voting shares may vote on certain
(The Special Economic Zone Act of 1995) matters, they have the right to dissent on said
matters; thus, they have appraisal rights on said
The primary purpose of this law is to provide matters.
incentives to needed investments.
Securities
19