FAR EASTERN UNIVERSITY

Institute of Accounts, Business and Finance

LAW 1103-ASSIGNMENT 1

SUMMER 2023

PROBLEM 1. X is planning to organize the Antipolo Country Club Incorporated

and let the club buy 20 hectares of land for P20M which will be developed into
a sports and health club complete with swimming pools, tennis courts, spas,
bowling lanes, etc. Another P20M is needed to develop the club and will be
raised thru the sale of certificates of membership. The certificate of
membership shall give the purchaser the right to use all club facilities, and
shall be transferable. It shall not however, give the purchaser any right in the
income or assets of the club. The purchaser must also pay monthly dues.

QUESTION NO. 1. Is the certificate of membership an investment contract and

hence, a security within the meaning of the Securities and Regulations Code
(SRC)?

QUESTION NO. 2. Should the issuer file an application for registration pursuant
to the registration requirement under the SRC?

PROBLEM 2.

Ms. Ang was employed in an investment bank. X, a medical drug company,

retained the bank to assess whether it is desirable to make a tender offer for
Y company, a drug manufacturer. Ang overheard in the course of her work the
plans of X. By herself and thru associates, she purchased Y stocks available at
the stock exchange priced at P200 per share. When X’s tender offer was
announced, Y stocks jumped to P300 per share. Thus, Ang earned a sizable
profit.

Is Ang liable for breach and misuse of confidential or insider information gained
from her employment?

PROBLEM 3.

Benguet Mines, Inc. has total assets of P60 Million with 210 stockholders
holding at least 100 shared each. The company has two principal stockholders,
Alpha which owns 60% of the shares of stock, and Bravo; which owns 17%.
Alpha in turns is owned to the extent of 21.13% by Acme, Inc.; 29.69% by
Charlie Inc.; 9% by Bravo; and the rest by individual stockholders. None of
the parties is a publicly-listed company. Bravo now proposes to buy Acme’s
and Charlie’s shares in Alpha, which would give it, direct control of Alpha and
indirect control of Benguet Mines.

Is the proposal of acquisition by Bravo subject to the mandatory tender offer

rule? Why or why not?