Re: Computation of Retained Earnings Available for Dividend Declaration

February 14, 2019SEC-OGC OPINION NO. 03-19RE: COMPUTATION OF RETAINED EARNINGS AVAILABLE FOR DIVIDEND DECLARATIONAtty. Benedicto PanigbatanSycip Salazar Hernandez & GatmaitanSycipLaw Center, 105 Paseo de RoxasMakati CityDear Sir :This refers to your letter requesting confirmation that a cash dividend declaration based on the amount of unrestricted retained earnings without deducting the cost of treasury shares acquired from the redemption of redeemable preferred shares (as provided for in the articles of incorporation) is valid. Your letter states that a corporation (the "Declaring Corporation") has unrestricted retained earnings and treasury shares arising from the redemption of its 'Preferred Redeemable Shares' as recognized in its Articles of Incorporation ("AOI"). The Declaring Corporation is proposing to declare cash dividends. The unrestricted retained earnings of the declaring corporation is sufficient to support the dividend declaration provided that the treasury shares arising from the redemption of the shares will not be deducted. Given this situation, your letter asks whether the cash dividend declaration based on the unrestricted retained earnings gross of the treasury shares from the redemption of preferred redeemable shares shall...