Only the SEC can police the Philippine Stock Exchange

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EMETERIO SD. PEREZ

Public investors who trade in shares listed on the Philippine Stock Exchange (PSE) should be informed of any change in ownership of a big block of common shares that are sold in special block sales. They may find nothing wrong with the agreement between the buyer and the seller, but they might be puzzled over the omission of their identities from the information made available to the public.

The rule may be vague to the public as far as the full disclosure policy that governs listed companies is concerned. Yet, for the sake of investors who make family-owned businesses listed but not necessarily public, the tender offer reports should not be limited to naming the members of the board and the management.

Public traders are likely to care less about such facts and care more about who the sellers and buyers are behind the special block sales transacted on the exchange.

If you happen to be among the public investors who buy and sell listed shares, you may go to the extent of searching for relevant disclosures and be disappointed in the end to find nothing of that sort of information posted on the PSE website.

As a matter of fact, a number of listed companies still use the list of top 100 stockholders in their definitive information statements (DIS). Sometimes, they make it appear that PCD Nominee Corp. is their biggest stockholder. It is not. It acts only as a record stockholder for the true owners of common shares, including the shares owned by the majority stockholders.

PCD Nominee Corp. is not the only entity that can act as a record stockholder; certain nominees of the owners are also assigned to represent some, if not the big blocks of common shares, which are voted by the majority.

Full disclosure
PCD Nominee is not always the top stockholder of listed companies. In a definitive information statement, Metropolitan Bank and Trust Co. (Metrobank) named GT Capital Holdings Inc. as the beneficial owner of 292.321 million common shares, or 9.192 percent of 3.18 billion outstanding common shares, and of 454.745 million common shares, or 14.299 percent held by PCD Nominee as record stockholder.

In the same DIS, Metrobank also identified Grand Titan Holdings Inc. as the beneficial stockholder of 54.306 percent of GT Capital. It also named businessman George S.K. Ty and his family as owners of GT Capital “through Grand Titan Capital Holdings Inc.”

In addition, Metrobank explained in various footnotes the holdings of GT Capital, Grand Titan, Federal Homes Inc. and PCD Nominee. This identification of direct stockholders makes it easier for the public investors, who are also among the bank’s minority stockholders, to know who own what and how much of the outstanding common shares.

Of course, it would be too difficult for the public investors to know the sellers of shares in block sales as reported in the PSE’s daily stock market reports. How would they know the parties when the daily trade reports disclose only the number of shares sold in these block sales?

PSE as a self-regulatory body
As the regulatory authority, the Securities and Exchange Commission (SEC) may choose to ignore the right of the public to the full disclosure rule that should govern trading of listed stocks.

Definitely, the SEC should not, because it has full regulatory responsibility over listed companies since PSE shares are also listed on its own board.

As a listed company, the PSE is also a self-regulatory organization (SRO), a status granted to it by the SEC in 1998. With such dual identity, it could not possibly act as watcher of listed stocks, and at the same time, comply with the full disclosure rule.

For instance, if the PSE has committed certain infractions, would it also exercise its power to discipline itself? It could not possibly act against the interest of its owners, including stockbrokers, who used to be its only owners.

As of June 2017, four significant stockholders were listed in a public ownership report (POR), led by San Miguel Corporation Retirement with 7.555 million PSE shares, or 10.291 percent. The others were Premier Capital Venture Corp., PLDT Retirement Fund held for it by Banco de Oro, and Government Service Insurance System, with 6.673 million PSE shares, or 9.089 percent, each.

The POR computations left the public with 45.783 million PSE shares, or 62.36 percent. This majority ownership should have made the public the PSE’s majority stockholders in control of nine seats on the company’s 15-person board.

Are they? Just asking.

esdperez@gmail.com



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