August 13, 1973
RULES GOVERNING THE DISTRIBUTION OF EXCESS PROFITS OF CORPORATIONS
In the interest of investors and of the general public, the Commission, pursuant to the powers vested in it by law, particularly Presidential Decree No. 270 and Republic Act No. 1143, hereby promulgates the following rules and regulations: Cdpr
1. All corporations which have surplus profits in excess of necessary requirements for capital expansion and reserves shall declare and distribute the excess profits as dividends to stockholders.
2. Where the financial statements of the corporation show surplus profits in excess of 100% of paid-up capital, it shall explain by footnotes why the same has not been declared as dividends. If the explanation is not satisfactory, the Commission shall direct the corporation to distribute the excess as dividends.
The Commission will consider as sufficient justification for non-distribution of dividends, the following:
A. The corporation has definite expansion plans approved by the Board of Directors and Stockholders, and whenever necessary, by the proper government authority. The amounts appropriated for such purpose shall be segregated from the free surplus. Upon completion...
