Under what condition may a corporation purchase its own redeemable shares despite the rule on retained earnings?
Redeemable shares are those which the corporation is authorized to purchase back from the holders upon the expiration of a fixed period (SEC. 8, Revised Corporation Code of the Philippines). Uniquely, this purchase may occur regardless of the existence of unrestricted retained earnings in the corporation’s books, which is an exception to the general rule for treasury stock acquisition. The issuance of these shares must be expressly provided for in the articles of incorporation, and the terms and conditions must be clearly stated in both the articles and the certificate of stock. The entire process remains subject to specific rules and regulations issued by the SEC.
30 October 2025
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