Re: Legal Opinion on Rematerialisation of Shares.
We refer to your letter dated 05.02.2008 regarding the captioned subject.
From perusal of your letter it appears that, Bank 1 (“BANK 1”) declared bonus shares at 1:1 ratio for the year 2006 which was duly approved in its 24th Annual General Meeting held on 30 April 2007. BANK 1 served stock dividend notice 2006 to all shareholders of BANK 1 to provide BANK 1 with their BO A/C (Beneficiary Owner’s Account) number by giving a date line for crediting thereto. Among the total 1996648 Bonus Shares – 2006, BANK 1 have so far distributed 921843 shares to the respective shareholders who provided their BO numbers and the remaining 1074805 shares (held by approximately 3000 shareholders) have been kept in a Suspense A/C titled BANK 1 Bonus Shares Suspense A/C – 2006.
BANK 1 have to maintain a register for individual record of undistributed bonus shares. If and when BANK 1 gives any benefit to the shareholders in the form of stock dividend in the future then BANK 1 has to maintain series of registers for the future undistributed stock dividend for the concerned year(s). If this continues BANK 1 feels that it may be very difficult to count the total shares of a single person as BANK 1 have to sum up the undistributed shares from several registers.
BANK 1 feels that if BANK 1 can issue the undistributed bonus shares of individual shareholders in materialised form (i.e. share certificates on paper) and credit the same to the certificated part of BANK 1 register under the same folio or index of the concerned shareholders, it would be easier to calculate the total shares held by a single person. For this purpose BANK 1 wishes to issue a notice to the concerned shareholders giving a dateline for providing BO A/C No. within a certain period, failing which BANK 1 shall issue the shares in materialised form by issuing paper share certificate and credit the same to the certificated part of BANK 1 register. BANK 1 also wants to Bank 1ish a similar notice in the press.
In the circumstances stated above, you require our legal opinion as to whether BANK 1 may issue the undistributed bonus shares materialised form by issuing paper share certificate and credit the same to the certificated part of BANK 1 register. If yes, you have also requested us to vet the draft notices.
Upon perusal of the relevant laws, we have not found any legal restrictions restricting BANK 1 from issuing the undistributed bonus shares materialised form by issuing paper share certificate and crediting the same to the certificated part of BANK 1 register. Nevertheless, as the Securities and Exchange Commission (“SEC”) is the regulatory authority in this regard, we suggest you to obtain the prior clarification/guideline from SEC in this matter.
We have perused the notice which will be sent to the relevant shareholder and the notice which will be Bank 1ished in the press. We found both notices to be in order.
If you have any further query, please do not hesitate to contact the undersigned.
For: “The Lawyers & Jurists”