LISTED companies should allocate at least a board seat for their public stockholders. By doing so, they would be reciprocating them for their role in getting their shares listed on the Philippine Stock Exchange. The public who trade on listed shares may not own enough numbers of common shares for them to deserve directorships in their companies, but united they must be entitled to a nominee.
Public investors who are, at the same time, stockholders of listed companies have long been taken for granted by some, if not all, listed companies. Whether or not they find a dependable ally in the Securities and Exchange Commission (SEC) is subject to speculation. Yes, they need the SEC, otherwise they would remain helpless without it even with a very strict implementation of the minimum public ownership rule.
As I have written a few times in the past, it is up to the SEC to scrutinize the ownership of common shares lodged with PCD Nominee Corp. if its officials want a more credible regulatory authority. All the SEC knows – or is informed of – is only a “semblance of scrutiny.”
Don’t misunderstand the phrase inside a pair of quotations marks. I don’t own it; I was only paraphrasing a speech many years ago that I heard over the radio. “Let us give our workers a semblance of freedom,” the speaker told his audience in an authoritative tone.
Wow! What a public statement from a politician who, nevertheless got applauded for it. His listeners were to realize later that they were taken for a ride. What they were assured of was only a “semblance” and nothing more.
What an irony for the public stockholders of listed companies! They own common shares with voting rights but are not entitled to representation on the board. This should make the independent directors (IDs), who need only a nominal share to get appointed to the board, much luckier than the public.
Fortunately for listed companies, it seems what concern most SEC officials are that these companies get their
shares listed and that they pay their registration and listing fees. Presto!
They even consider these stock corporations public when they are not. What is 10 percent of outstanding common shares when a listed company is allowed to circumvent the rule by issuing voting preferred shares?
Do IDs, as they are so categorized by a modifying adjective, live up to the expectations of the public? This is a question to which there is only one answer: a big ‘No.’
There is no such thing as independence among IDs in this country. They are only independent as far as their position suggests, but in fact, they are never elected but are appointed. As nominees of the majority stockholders, they are beholden to the appointing powers who, usually, are the families that control ownership of the listed companies.
Get rid of IDs
To the public who may be curious enough to know the truth behind IDs’ appointments, I suggest they access www.sec.gov.ph, which, hopefully, still carries the name of Chief Justice Artemio V. Panganiban, who told the SEC what IDs do as appointees to the board.
If they want what I wrote over a year ago, they may want to also read “SEC abandons own rule,” Duediligencer, April 20, 2014.
The point is, listed companies do not need IDs to make profits. Why not get rid of them? It is up to the SEC officials to think of ways to implement this suggestion.
On the part of our lawmakers, they can amend the Securities Regulation Act. It is about time listed companies gave back to the public the board seat that belonged to them in the first place. To have been replaced on the board by unqualified IDs beholden to the majority owners is an injustice inflicted on the public stockholders by listed companies.
Are IDs really independent? Of course, a job audit would find that they are not and have never been, and will never be independent. Otherwise, the majority owners would not have accepted them as members of the board.