40-60% ownership law makes Philex Filipino

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Emeterio Sd. Perez

Last part of a series
IT is up to the Securities and Exchange Commission (SEC) to determine the nationalities of the corporate stockholders of Philex Mining Corp. Are they really controlled or fully owned by Filipinos?
If the answer is yes, then Philex is, indeed, a Filipino stock corporation.

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In its ownership filings, Philex showed it is Filipino, with nearly 1.92 billion of its outstanding 4.94 billion common shares equivalent to only 38.774 percent, or below the 40 percent limit set for foreign stockholders, as stipulated in the Constitution.

In its ownership filings, Philex showed it is Filipino because only about 1.92 billion of its outstanding common shares, or 38.774 percent, are held by foreigners. That is less than the allowable limit for foreigners – as stipulated in the Constitution – of 40 percent of its outstanding 4.94 billion common shares.

Based on Philex’s computations, foreigners could own up to 1.976 billion Philex common shares, which represent 40 percent of the company’s outstanding common shares.

Through its various units and affiliates, First Pacific and other foreigners, have not reached that limit yet.

Ownership reports

As a listed company, Philex is covered by the full disclosure rule that makes the stock market transparent. It complies with the submission of ownership filings, such as public ownership reports (POR) and top 100 stockholders’ lists.

In its definitive information statements (DIS), Philex also identifies its stockholders with the required explanatory footnotes on the ownership of certain foreign stockholders, such as First Pacific.

As a mining company, Philex files reports to the Department of Environment and Natural Resources (DENR), the SEC and the PSE. Hopefully, these regulatory agencies employ experts who can assess Philex’s faithful compliance with their respective regulations.

How reliable are Philex’s ownership filings?

If the public investors were to rely only on the company’s postings, they could be misled by certain entries and conclude that Philex is an Indonesian corporation because First Pacific is controlled by Indonesians.

Well, as far as the laws of this country are concerned, Philex is Filipino. As defined under a provision of the Constitution, the nationality of a stock corporation that is at least 60-percent owned by Filipinos is Filipino.

PLDT case

The public might be better informed if they would reread the ruling of the Supreme Court on a landmark ownership case involving Philippine Long Distance Telephone Co., which has been renamed PLDT Inc.

In the said decision, the High Court tossed to the SEC the responsibility of determining PLDT’s ownership profile. The rest of the SEC’s interpretation is history, when it allowed PLDT to escape any kind of penalty. As regulators, its officials even allowed PLDT to issue 150 million voting preferred shares to PLDT Beneficial Trust Fund.

Incidentally, or not, First Pacific also used said preferred shares in controlling Philex’s board, which the SEC either failed or intentionally failed to notice. Was it because SEC Chairperson Teresita Herbosa used to be PLDT’s lawyer? If so, how about the other SEC commissioners? Why, all of a sudden, did the rest of the five-person regulatory body went silent on that inside the commission room as though they were in a religious annual retreat?

SSS holdings

Like First Pacific, the Social Security System (SSS) is also a significant Philex stockholder. As of Dec. 31, 2016, SSS owned 999.35 million common shares, or 20.23 percent.

In January, SSS reduced the number of Philex common shares it owned to 990.827 million shares, or 20.06 percent. The reduction resulted from its sale during the month of 8.328 million shares at prices ranging from a low of P8.58 to a high of P9.45 apiece.

At an average price of P9.015 per Philex share, SSS could have grossed P75.076 million.

Is SSS selling listed shares to raise money for the additional P2,000 monthly pension for member retirees?

Note: A PSE posting showed SSS sold 8.328 million Philex common shares in January 2017. The sold shares, plus the number of SSS shares after the sale totaled 999.155 million shares. However, the top 100 stockholders’ list as of Dec. 31, 2016 held 999.354 million Philex shares. Where are the SSS-owned 198,597 Philex shares that account for the difference? Just asking.

esdperez@gmail.com

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