SEC Opinion on Reversal of APIC and Reinvestment as Capital or as Loan (SEC Opinion No. 14-13) Salient portions of the Opinion follows: I. Reversal of APIC and Its Subsequent Conversion into Loan The nullification of APIC and its subsequent conversion into Loan violates the Trust Fund Doctrine. This is because the APIC is considered a contribution of a stockholder over and above the par value of shares and falls under the concept of corporate Trust Fund upon its recording in the books of the corporation. II. Reversal of APIC and Conversion into Subscribed Capital You represented that Toenec infused APIC purposely to eliminate the Companys deficit and eventually to secure the renewal of PCAB License. You also stated that such transaction wiped out the deficit by PCAB declined to approve Toenecs application for renewal of license. However, we noticed that par. 14.3 of Toenecs Notes to FS as of December 31, 2011 and 2012 merely disclose that this APIC was contributed to support the Companys operations. Stated otherwise, the disclosure in the Notes does not make the infusion subject to a suspensive condition that the PCAB license would be renewed. Thus, ownership over the funds has already been transferred to the corporation. Its nullification, despite its subsequent conversion into subscribe capital , equally violates the Trust Fund Doctrine. Below is the link of the full opinion for reference. sec.gov.ph/investorinfo/opinions/ogc/cy%202014/14-13.pdf
Posted on: Fri, 26 Sep 2014 01:29:18 +0000
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