GIS is for perusal by public investors

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EMETERIO SD. PEREZ

THE general information sheets (GIS) are among the filings under the full disclosure rule that governs listed companies. They are submitted to the Securities and Exchange Commission (SEC) and posted on the website of the Philippine Stock Exchange (PSE). They contain data that public investors may find significant to guide them in choosing the listed stocks that suit their investment preferences.

The public stockholders who own common shares issued and listed by companies for public trading may find GIS a good source of information.

Sometimes, though rare, listed companies hide the identities of their significant stockholders and even those of the majority owners behind PCD Nominee Corp. This would be a big disadvantage to the public investors, who should be informed about the principal stockholders of listed companies.

In short, as traders who buy and sell listed common shares, the public should be told through disclosures the identities of the buyers when the principal stockholders sell. As disclosed and posted on the PSE website, only the sellers are named in the filings. Seldom are the buyers identified in “Statement of Changes in Beneficial Ownership.”


Non-voting stocks
Why do listed companies seldom trust their public stockholders with voting preferred shares?

The question is posed here because listed companies that are anyway not public, rarely, if ever, issue voting preferred shares to the public.

Why should the majority stockholders deprive their public stockholders the chance to own voting preferred shares when some of them portray them in public ownership reports (POR) as either the significant, if not the majority stockholders?

Instead of allowing their public stockholders to own voting preferred shares, the majority stockholders, who are usually the rich and very rich families, limit the public ownership to non-voting preferred shares. This is the worst injustice that these families commit and persist in committing against the public investors who have been primarily responsible in having some, if not all, their outstanding common shares listed.

Here is the irony of ironies: the number of non-voting preferred shares issued by listed companies even top the number of outstanding common shares.

It is unfair for the public investors to get such unjust treatment from the rich and very rich controlling families of listed companies.

Public borrowings
A listed company that issues either voting or non-voting preferred shares is, in fact, borrowing money from the public. In other words, it is engaged in public borrowing.

In this case, the owners must not restrict to non-voting preferred shares the public ownership in their listed companies.

If the public investors would want to know who own what and the number of stockholders that a listed company has, they have only the GIS to rely on. They could find them among the disclosures posted on the PSE website for their perusal.

From a GIS, the public stockholders would find how many among them have bought non-voting preferred shares on the open market. They should not expect voting preferred shares to be listed; in fact, they are not allowed to own even a few because the majority owners always see to it that they themselves own most of their companies’ voting stocks, including the non-listed voting preferred shares.

It is up to the public investors to continue buying non-voting preferred shares for the interest earnings that they expect. After all, accumulation for better income is the reason for engaging in stock buying.

Due Diligencer’s take
The SEC exercises regulatory powers over listed companies even if it has granted PSE self-regulatory organization status. However, it could, if it wants to, extend the protection that the public needs in dealing with the majority and controlling stockholders of listed companies.

The SEC officials should not be afraid of taking the risk of offending these very rich families by requiring them to allow the public investors to participate in the ownership of voting preferred shares. In fact, they should also demand and order the listing of voting preferred shares.

As a regulatory authority, the SEC should ask not only why the public stockholders of listed companies are limited to owning non-voting preferred shares but also should be told why the majority stockholders do not list voting preferred shares.

Finally, the public investors are advised to read the GIS of every listed company. By doing do, they would know their co-owners even if they are never privy to anything going on inside the boardrooms.

Besides, it would be good for the public to learn who among these principal stockholders hold voting preferred shares and how these business owners use them to stay in control of the board in connivance with their chosen independent directors that are not independent at all.

Will anyone among the public be interested in including GIS among their files? Just asking.

esdeperez@gmail.com

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