Question & AnswerQ&A (PRESIDENTIAL DECREE NO. 1963)
The purpose of Presidential Decree No. 1963 is to further amend Presidential Decree No. 694, as amended, otherwise known as the 1975 Revised Charter of the Philippine National Bank, to increase its authorized capital stock and strengthen the bank for economic development and national economic recovery during a grave economic crisis.
The authorized capital stock of the Philippine National Bank is increased to Twenty-Five Billion Pesos, divided into two hundred fifty million shares at a par value of One Hundred Pesos each.
The Government of the Philippines shall fully subscribe and pay for the whole increase in capital stock, subject to the exercise of pre-emptive rights by existing private stockholders.
The payment is divided as follows: 50% in cash appropriated from the National Treasury and 50% in the form of taxes due to the National Government, to be applied starting from the calendar year 1985.
The classes of shares are: Preferred "A" shares, Preferred "B" shares, Common "A" shares, and the remaining common shares.
Preferred "A" shares are preferred as to dividends at 10%, cumulative, participating, non-voting, dividends exempt from income tax, redeemable at the option of the Bank after five years, and convertible to common shares if dividends are unpaid for two consecutive years.
Preferred "B" shares consist of two million shares available for subscription by citizens of the Philippines only. They are preferred as to dividends, cumulative, participating, non-voting, dividends exempt from income tax, and convertible to common shares if dividends are unpaid for two consecutive years.
Common "A" shares are non-transferable except to qualified officers and employees of the Bank. Transfers to other persons are invalid and grant the Bank the right to acquire the shares at par value.
Existing private stockholders have pre-emptive rights and have 90 days to exercise such rights regarding the increased capital stock. Any unsubscribed shares after this period shall be automatically subscribed and paid for by the government.
Yes, the Bank is authorized to purchase its own shares held privately.
The Board of Directors may increase the number of preferred shares and Common "A" shares by converting outstanding common shares, subject to the President's approval upon the Finance Minister's recommendation.
No, dividends on preferred and common shares as provided are exempt from income tax.
Holders of Land Bank bonds may exchange such bonds for shares offered for sale to the public under terms prescribed by the Bank's Board of Directors.
Presidential Decree No. 1963 took effect immediately upon its signing on January 11, 1985.