Define ‘public’



WHO can qualify as public stockholders of listed companies?

In the absence of guidelines from the Securities and Exchange Commission, other corporate stockholders, apart from the majority owners, become public.

Simply put, public is more encompassing than the minimum 10-percent public ownership required under the rule. It also covers corporate stockholders that may at the same time be affiliates of listed companies or their majority stockholders.

Nobody knows who among corporate stockholders are legitimately public because they are not required to fully disclose their ownership structure. In other words, they are exempted from the market’s policy of full transparency.

A more defined demarcation line between majority stockholders and “other less significant stockholders” is needed to distinguish the public from corporate stockholders. Since there is none, “other less significant stockholders” become the public and at the same time minority stockholders.

Due Diligencer is presenting the ownership profiles of the following listed companies to illustrate the need for a precise definition of the word “public” as contained in public ownership reports.

100 percent foreign
SPC Power Corp. listed its public stockholders as owners of 175.659 million common shares, or 11.74 percent, topping the regulatory requirement of 10-percent minimum public ownership.

In a public ownership report (POR) as of Oct. 18, it reported 1.497 billion outstanding common shares out of 1.569 billion listed and issued shares.

Of the outstanding, foreigners own 570.87 million common shares, or 38.15 percent. In a footnote to its POR, SPC said the Electric Power Industry Act of 2001 sets no limit to foreign ownership of its capital.

As of the same cutoff period, SPC listed four principal stockholders who hold 1.2778 billion common shares, or 85.393 percent. These are Kepco Philippines Holdings Inc., 568.099 million common shares, or 37.96 percent; Intrepid Holdings Inc., 341.906 million common shares, or 22.84 percent; Jad Holdings Inc., 293.201 million common shares, or 19.592 percent; and KV Holdings Inc., 74.75 million common shares, or 4.995 percent.

Intrepid Holdings used to own 371.837 million SPC common shares, or 24.84 percent but sold 29.931 common shares on Sept. 9 to LDI Power Holdings Inc.

ALH Management Inc., which is an SPC affiliate, holds 23.85 million common shares, or 1.594 percent.

In summarizing its ownership report, SPC said it has 1.321 billion common shares, or 88.26 percent, that it classified as “lock-up shares” including 1.012 million common shares held by individual insiders. The public own the remaining 175.659 million common shares, or 11.74 percent.

No board seat for public
ABOITIZ Power Corp. (APC) belongs to Aboitiz group of companies. Its principal stockholder is Aboitiz Equity Ventures Inc. (AEV), which owns 5.658 billion common shares, or 76.88 percent of 7.359 billion outstanding common shares.

In turn, Aboitiz & Co. Inc. (ACI) owns 2.736 billion AEV common shares, or 48.56 percent. These layers of ownerships would make APC indirectly owned by ACI thru the holdings of AEV. In addition, the Aboitiz group also holds additional 146.473 million APC shares, or 1.99 percent, that are hold by ACI.

The combined holdings in APC of AEV and ACI total 5.804 billion common shares, or 78.874 percent.

In a public ownership report, APC attributes to the public the ownership of 1.409 billion APC common shares, or 19.15 percent. With their APC holdings equivalent to 19.15 percent, they would have been entitled to at least a seat in the nine-person board, which they don’t have and never had.

More public?
Aboitiz Equity Ventures projects itself to be more public than others by crediting to the public the ownership of 2.621 billion common shares, or 46.43 percent. This ownership profile should make AEV more public than others when it is not because it denies them even a nominee to its nine-person board.

How did the public end up with as much as 46.53 percent of AEV’s 5.695 billion common shares when ACI owns only 48.56 percent? The percentage would not change much even if the AEV shares held by three Aboitiz-owned corporate stockholders are added to ACI’s holdings in AEV that represent only 0.03 percent of outstanding AEV common shares.

Going by AEV’s own presentation, Due Diligencer would credit the public with at least four board seats but they don’t. Instead, the Aboitizes dominate it with their own nominees including three independent directors.

How did the public come to own 46.53 percent of AEV’s outstanding common shares? Only the SEC can expertly provide us the answer.


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