ONLY one among the readers of The Manila Times who also regularly reads Due Diligencer is familiar to me. From somewhere in the United States, Ben Ongoco makes his comments on certain topics here that interest him. I assure him and the others who write me that I treasure their comments, whether favorable or adversarial.
Yet sometimes I also receive queries about the stock market about which I do not have the answers. I only report to the public the filings that listed (but not necessarily public) companies post on the website of the Philippine Stock Exchange. I appreciate them, though, for including Due Diligencer in their reading habits whenever they either surf the paper’s website or buy the printed copies.
To be frank with this paper’s readers, I am not a lawyer so I cannot decipher the legality or illegality of a corporate act. I am limited to reporting the FACTS about listed companies, but I try my best to give the readers more than what has been disclosed to the public. I do not mean to say listed companies have been short in complying with the market’s full disclosure rules, although some may be unfairly accused of incomplete disclosure when they are only going by the letter of the rules.
Not being a lawyer, I can only suggest to Lito Anda, who is perhaps among the public investors who trade in shares of listed companies, to address his query to the Securities and Exchange Commission (SEC). He asked if removing stockholders’ preemptive rights, which was approved by IRC’s board, is legal. My response is this: His query needs the opinion of the SEC.
But I warn Mr. Anda that should he decide to raise the issue before the SEC’s five-man administrative body, chances are he will be subjected to a series of legalities that may be confusing yet nevertheless based on the rulings of the Supreme Court.
Personally, I think the SEC should define preemptive rights for Mr. Anda and the entire investing public. As a regulatory agency, the commission should not be limited to simply promulgating the rules and drafting legal opinions sought by company lawyers. What about the interests of the investing public who may have to dip into their investible funds if they need to hire lawyers just to seek the SEC’s opinion on market matters that affect investors?
To SEC officials and lawyers: Just think of what the words “preemptive rights” truly mean and you will have a more accessible stock market under a self-regulatory organization that is the PSE. If you think you have to abide by the SC’s definition, which I find restrictive, then by all means seek the court’s clarification. At the same time, ask those justices whether in the case of listed companies, the public should be entitled to all issuances of new shares, whether these are sourced from the unissued shares of, or increases in, existing authorized stock. Will this not be more democratic?
Whether Mr. Anda is an investor or a trader working for a stockbroker, he should have known that in a well-organized market, the general public who invest in listed stocks will remain helpless against the big players. Unless they unite and form their own group—I do not mean a lobby group — to question certain acts of public companies, they will remain voiceless. It is not enough to ventilate the issue on, say, preemptive rights in the media when this should have been raised as a legal query that needs closer scrutiny by the SEC’s lawyers.
Definitely, Mr. Anda won’t be able to take on by himself the task of protecting the small investors. The issue he raised in connection with IRC’s plan to deprive the company’s public stockholders of their preemptive rights affects everyone who owns a few shares in listed companies.
For the information of Mr. Anda, IRC is a late comer in amending its charter to make it a listed company although exclusively owned and controlled by a few. A few other, if not many, so-called public companies are already enjoying the exclusive privilege of issuing new shares without regard for the investing public who, in the first place, enabled them to qualify for listing their shares on the stock exchange.