CALATA Corp., the industrial agrochemical company traded on the stock market by public investors, has failed again and again to fully inform the public in a timely manner about the financial condition of the company.
Like it did in previous quarters, Calata told the Philippine Stock Exchange (PSE) that it could not meet the Nov. 16, 2017 deadline because it was still in the process of gathering data for the three-month period ending September 30. It added that it was “still finalizing and consolidating the material information on its financial conditions and results of operations.”
With 10 days to go before the deadline, Calata posted that information on Nov. 6 on the website of the PSE’s website.
A quarterly financial filing is required of listed companies under the market’s full disclosure rule. It is the only link between the public stockholders, who don’t have access or representation on the board, and the listed company in which they own shares.
Will the Securities and Exchange Commission (SEC) and the PSE allow the postponement that Calata is asking for? If the other listed companies are able to comply, why can’t Calata?
What could have been happening to Calata that it could not abide by the rules?
As the deadline draws near, the SEC and the PSE have to take up Calata’s offer of justification for the delay in filing the required financials. After all, they are tasked with balancing the interest of the public investors and that of listed companies such as Calata.
Calata also posted earlier on the PSE website a similar filing. On Aug. 8, it requested an extension of the deadline to submit its quarterly report for the period ending June 30 this year.
“The corporation,” it said, “will not be able to file the above-mentioned report on its deadline on Aug. 14, 2017 because it is still finalizing and consolidating the material information on its financial conditions and results of operations.” Finally, it filed a report on Aug. 18, 2017 and submitted on Aug. 22, 2017 another quarterly filing as “amended.”
Calata cited the same reason for the delayed filing of its first-quarter financials for the current year and for its late submission of the three-month financial report back in 2016. Even in the submission of its annual reports, the company appeared to have been remiss in its compliance with the full disclosure rule.
Public as majority stockholders
Greenery Holdings Inc. (GHI) reported in a public ownership report (POR) as of June 30 that the company’s public stockholders owned 1.247 billion 1,247,162,783 GHI common shares, or 69.257 percent of 1.801 billion 1,800,778,572 outstanding GHI common shares.
As the majority stockholders, GHI’s public stockholders should have been entitled to elect at least seven seats in an 11-person board. (Note: The computation resulted in 7.6 seats.)
The computation Greenery Holdings presented to the public was based only on outstanding common shares. What happened to the company’s 1 billion preferred shares? Why has the company excluded them from its POR presentation?
Well, all listed companies compute their PORs based only on outstanding common shares.
The inclusion of preferred shares would give Calata a total of 2.801 billion 2,800,778,572 outstanding voting shares. Granting that Calata’s public stockholders held 1.247 billion 1,247,162,783 common shares, their voting shares would be equivalent to 44.529 percent.
That’s a big difference of 24.728 percent, which could elect at least two seats on Greenery Holdings’ board.
Isn’t it ironic that despite making the public its majority stockholders, Greenery Holdings has not allowed them to elect even one nominee to the board?
Due Diligencer’s take
The public investors who buy and sell listed common shares of Greenery Holdings would never be the company’s majority stockholders. Even PCD Nominee Corp. has been credited with 369.170 million GHI common shares, or 20.501 percent of outstanding 1.801 billion GHI common shares. This ownership would have entitled PCD Nominee to at least two board seats.
Of course, PCD Nominee acts only as a record stockholder for the actual or beneficial stockholders that it represents.
Being the chairman, president and chief executive officer, businessman Antonio L. Tiu must be the majority stockholder of Greenery Holdings.
A disclosure listed Tiu as a GHI direct stockholder with 10,000 common shares. Earthright Inc., which he owns, holds for him 1.187 billion voting shares, including 1 billion voting preferred shares, which represent 42.399 percent of 2.801 billion outstanding voting shares.
Of course, nobody knows the beneficial stockholders of the PCD-held common shares.
Does Tiu also own the 369.170 million GHI common shares that PCD Nominee holds? No, he cannot not own those shares. Greenery Holdings said so in its own filing: “No stockholder owns more than 5 percent of the outstanding capital stock under PCD Nominee Corp.”
Questions: Who then owns these GHI common shares held by PCD Nominee? Who represents ThomasLloyd Cleantech Infrastructure Fund on the company’s board? Will the SEC tell the public? Just asking.