Resort Shares in the Philippines: An Overview
To date, there is no specific Philippine law providing for the acquisition of resort shares in the country, but the prevailing practice of most resort owners is to register first a leisure club as a non-stock corporation with the Securities and Exchange Commission (SEC).
A non-stock corporation as defined in the Philippine Corporation Code is one where no part of its income is distributable as dividends to its members, trustees, or officers. Any profit derived from its operations may be utilized for achieving the purposes of the corporation. Only in the event of dissolution shall the corporation’s assets be subject to distribution.
Once the SEC issues a certificate of incorporation, the board of trustees of the club then determines the type of shares it intends to sell to the public. It also exercises discretion in designating the name; rights; and prices for each type. Most leisure clubs in the Philippines today use the terms Class A, Class B, and Class C. Class A usually refers to shares available for Filipino individuals while Class B are available for nationals and aliens alike. On the other hand, Class C shares are those shares available for corporations and other juridical entities such as partnerships and associations. Note must be taken that there are clubs that employ their own definitions of A, B, and C shares so it is highly advisable to read first their rules and regulations before deciding on which type to purchase.
Nonetheless, before anyone is allowed to purchase a club share, the Board must first approve the individual or in case of a corporation, the assignee’s membership in the club. In short, it is common practice that only club members are allowed to purchase shares. Approval or denial of a membership application lies solely with the Board.
An individual whose membership is denied will not be allowed to purchase a share, but in the case of an assignee of the corporation, the latter can designate another individual as its assignee despite the denial and then repeat the application process.
On the other hand, approval of a membership application entitles the member to purchase a share; enjoy the use of the facilities and amenities of the club; and the right to resell the share subject to special rules that the club may provide. Said membership may also extend to immediate family members depending on its rules and regulations.
To summarize the process of acquiring a resort share in the Philippines, the following are the steps:
Indeed, due to the club’s incorporation, its Board of Trustees exercises a wide discretion in determining its own policies, rules, and regulations. So for those interested in acquiring a resort share, familiarizing oneself with information about the club is the gateway to enjoying a vacation in a highly exclusive resort.