GUIDELINES AND PROCEDURES FOR CORPORATE LANDOWNERS DESIRING TO AVAIL THEMSELVES OF THE STOCK DISTRIBUTION PLAN UNDER SECTION 31 OF R.A. 6657 AND SUPERSEDING DEPARTMENT OF AGRARI…
Procedures are hereby promulgated for the guidance of all concerned.
SECTION 1. Policies —
A. Qualified Corporate Landowner-Applicant —
All bonafide stock corporations owning agrarian cultural land utilized
for agricultural production and existing as such as of June 15, 1988,
the date of effectivity of R.A. 6657, may apply for and avail of the
voluntary stock distribution plan provided in Section 31 thereof. New
corporations incorporated after the effectivity of R.A. 6657 may also
apply, provided that they are subsidiaries of or spin-offs from their
mother corporation, which are otherwise qualified to apply hereunder but
have chosen to organize separately to facilitate stock acquisition,
control and greater benefits to the corporate landowner applicant’s farm
workers and other qualified beneficiaries.B. Qualified Beneficiaries — The qualified
beneficiaries in the stock distribution plan are all those identified as
beneficiaries of land transfer enumerated under Section 22 of R A.
6657.C. Stock Distribution — The stock
distribution plan shall be agreed upon by both the corporate
landowner-applicant and the qualified beneficiaries and subject to
approval by PARC DAR shall monitor and devise a system of ensuring the
voluntary acceptance by the beneficiaries of this plan for stock
distribution. The acceptance of the stock distribution plan by the
majority of all the qualified beneficiaries shall be binding upon all
the said qualified beneficiaries within the applicant-corporation.
SECTION 2. Applicant and Time of Filling —
The corporate landowner-applicant shall file the stock distribution
plan, in a form to be prescribed by DAR, and obtain approval within two
(2) years from the effectivity of R.A. 6657 but prior to DAR’s notice of
compulsory acquisition of said property under the same law.
SECTION 3. Proportion of Distribution — The
stock distribution plan of corporate landowner-applicant must give the
qualified beneficiaries the right to purchase at least such proportion
of the capital stock of the corporation that the agricultural land,
actually devoted to agricultural activities, bears in relation to the
corporation’s total assets under such terms and conditions as may be
agreed upon by them.
SECTION 4. Stock Distribution Plan — The
stock distribution plan submitted by the corporate landowner-applicant
shall provide for the distribution of an equal number of shares of stock
of the same class and value, with the same rights and features as all
other shares, to each of the qualified beneficiaries. This distribution
plan in all cases, shall be at least the minimum ratio for purposes of
compliance with Section 31 of R.A. 6657.
On top of the minimum ratio provided under Section 3 of this
Implementing Guideline, the corporate landowner-applicant may adopt
additional stock distribution schemes taking into account factors such
as rank, seniority, salary, position and other circumstances which may
be deemed desirable as a matter of sound company policy.
SECTION 5. Criteria For Evaluation of Proposal — The stock distribution plan submitted by the corporate landowner-applicant shall meet the following minimum criteria:
A. that the continued operation of the corporation with its
agricultural land intact and unfragmented is viable, with potential for
growth and increased profitability;B. that the plan for stock distribution to qualified
beneficiaries would result in increased income and greater benefits to
them, than if the lands were divided and distributed to them
individually;C. that the stock distribution plan is acceptable to a
majority, defined as 50% plus 1, of all the qualified beneficiaries.D. that the plan shall include a provision that the books of
the corporation shall be subject to periodic audit by Certified Public
Accountants chosen by the beneficiaries;E. that irrespective of the value of the beneficiaries’ equity
in the corporation, they shall be assured of at least one (1)
representative in the Board of Directors or in the management or
executive committee, if one exists, of the corporation, and the
corporation must amend its by-laws and/or Articles of incorporation to
provide such:F. that a beneficiary who avails of a stock option must first
execute the necessary waiver from being a beneficiary in another stock
distribution plan under this rule and/or land distribution under Section
22 of R.A. 6657. A breach of the foregoing constitutes a willful
violation of the Act;G. other criteria that the DAR may prescribe in making its own
independent evaluation of the stock distribution plan of the corporate
landowner-applicant as provided for in Section 13 herein.
SECTION 6. Valuation and Compensation — The
valuation of corporate assets submitted by the corporate
landowner-applicant in this proposal shall be subject to verification
and audit examination by DAR. The determination of the value of the
agricultural land shall be based on the land valuation guidelines
promulgated by DAR.
SECTION 7. Modes of Stock Distribution — The
stock distribution plan of the corporate landowner-applicant may be
effected through divestment of existing equity holdings by stockholders
or other modes of stock distribution acceptable to both parties and duly
approved by DAR
SECTION 8. Limited Transferability of Beneficiaries’ Stock
— The stock acquired through this stock distribution plan by the
beneficiaries may be transferred voluntarily only to other qualified
beneficiaries.
SECTION 9. Payment of Shares — The payment of
the purchase price of the shares shall be under such terms and
conditions agreed upon by the corporate landowner-applicant and the
beneficiaries, provided that in no case shall the compensation received
by the workers at the time the shares of stock are distributed be
reduced.
No government funds, i.e., National Treasury or Land Bank of the Philippines (LBP) funds, may be used for this purpose.
SECTION 10. Disposition of Proposal — After the
evaluation of the stock distribution plan submitted by the corporate
landowner-applicant to the Secretary of Agrarian Reform the Secretary
shall forward the same with all the supporting documents to the
Presidential Agrarian Reform Council (PARC) through its Executive
Committee, with his recommendation for final action.
SECTION 11. Implementation/Monitoring of Plan —
The approved stock distribution plan shall be implemented within three
(3) months from receipt by the corporate landowner-applicant of the
approval thereof by the PARC, and the transfer of the shares of stocks
in the names of the qualified beneficiaries shall be recorded in the
stock and transfer books and submitted to the Securities and Exchange
Commission (SEC) within sixty (60) days from the said implementation of
the stock distribution plan.
Upon completion, the corporate landowner-applicant shall be issued a
Certificate of Compliance. The Secretary of Agrarian Reform or his
designated representative shall strictly monitor the implementation to
determine whether or not there has been compliance with the approved
stock distribution plan as well as the requirements of the CARP. For
this purpose, the corporate landowner-applicant shall make available its
premises for ocular inspection, its personnel for interview, and its
records for examination during normal business hours.
SECTION 12. Revocation of Certificate of Compliance
— Non-compliance with any of the requirements of Section 31 of R.A.
6657, as implemented by these Implementing Guidelines, shall be ground
for the revocation of the Certificate of Compliance issued to the
corporate landowner-applicant.
SECTION 13. Reservation Clause — Nothing herein
shall be construed as precluding the PARC from making its own
independent evaluation and assessment of the stock distribution plan of
the corporate landowner-applicant and from prescribing other
requirements.
SECTION 14. Penalties — The provisions of
Sections 73 and 74 with regard to Prohibited Acts and Omissions, and
Penalties, respectively, shall apply to corporate landowner-applicants
found to be violating the provisions of these rules.
SECTION 15. Separability Clause — If, for any
reason, any section or provision of these Rules is declared null and
void, no other section, provision, or part thereof shall be affected and
the same shall remain in full force and effect.
SECTION 16. Effectivity Clause — These Rules shall take effect ten (10) days after publication in two (2) national newspaper of general circulation.
Adopted: 13 Oct. 1988
(SGD.) PHILIP ELLA JUICO
Secretary
Effective: 27 October 1988