SHOULD listed companies be allowed to list PCD Nominee Corp. as the biggest stockholder? If they are, then their filings would be puzzles for the public to play with to satisfy their curiosity on the identities of PCD-listed stockholders.
If ones goes by the full disclosure policy that governs the stock market, he or she should certainly feel that their investments are safe hoping the Securities and Exchange Commission and the Philippine Stock Exchange are ready to provide them the nets against “unusual trading committed by unnamed investors either among the public or even among company insiders.
Unfortunately for the public, the full disclosure policy does not necessarily cover every data they need to know. I have already expounded on the irony of an ownership profile that makes the public the majority stockholders but is not represented in the board. There is no explanation why this happens in a small market. Yet, for the sake of the individual investors outside the families that own and control listed companies, the SEC and PSE monitoring teams should at least require the full disclosure of ownership.
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Why should, for instance, Max’s Group Inc., continue listing PCD Nominee Corp. as owner of 1,080,248,325 shares, which is equivalent to 99.37 percent of 1,087,082,024 outstanding shares? This is what Max is telling tells public in burying the names of its beneficial stockholders among Top 100 stockholders as of Dec. 31, 2014.
Let me clarify. The analysis here is intended to illustrate how the rule governing the required minimum public ownership (MPO) of 10 percent has been misleading the public. It is time the Securities and Exchange Commission review it to make listed companies truly public. Will the SEC, for instance, define the MPO to exclude institutional investors who may be in the market only for dividends?
In using Max for an illustration, Due Diligencer does not mean to report that the Philippines’s food chain owns the monopoly of confusing public ownership filing. There are so many others that attribute ownerships to the public that may not be necessarily be public.
A more curious investor would continue reading the top 100 stockholders’ list to see how many Max shares held by PCD Nominee only to find most of them are in the names of individual stockbrokers followed by the number of shares each of them owns. Then, he or she may want to dig deeper into the puzzle only to discover a more-difficult-to-decipher Max’s public ownership report (POR).
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Ironically, Max’s POR as of Dec. 17, 2014 contained only one principal stockholder. As listed, The Real American Doughnut Co. indirectly owned 133,402,562 shares, or 12.6 percent. Does this ownership qualify the company as either principal or substantial stockholder?
In addition, Max reported “Max” under “others” in its POR as indirect owner of two blocks of shares—03,709,758 shares, or 9.8 percent, and 73,245,446 shares, or 6.9 percent. Aside from “Max”, “others’ also included Trofi Ventures Corp. with 72,922,668 shares, or 6.9 percent; No Bia Inc., 56,267,930 shares, or 6.9 percent and “various stockholders, 206,923,349 shares, or 19.5 percent. All in all, “others” held 513,069,151 shares, or 48.4 percent.
Finally, Max attributed the public with ownership of 267,134,627 shares in the same POR, equivalent to 34.2 percent. It explained under “other relevant information how it arrived at said percentage.
“Please be advised,” Max said, “that minimum public float was computed based on outstanding shares less shares held by wholly-owned subsidiaries.” If this is so, then what happened to the “shares held by subsidiaries?” Max’s explained that these are “deemed treasury shares in the consolidated financial statements of Max’s Group Inc.”
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Max left the public wondering where 34.2 percent came from because while it provided the number of shares, it omitted the number on which it based the computation. In short, 34.2 percent of what equals 267,134,627. “What” of course, would be 781,095,400, which, when deducted from 1,058,913,024 outstanding shares equals 277,817,623 shares, which, as Max explained, are “deemed treasury shares” in its financial filing.
If X as a mathematical symbol stands for the unknown, then Max has so many of it. If the public do not find the missing numbers confusing, then good for them. But for Due Diligencer, the Xs need to be translated into figures that should make the filings of Max—and other listed companies for that matter, readable and easily understandable.
Without the explanation, does Max mean to say that its free float level of 34.2 percent as of yesterday should be taken from 1,087,082,024 outstanding shares? If this would be so, then the public should own a total of 371,782,052 shares, which would be more than 10 percent required under minimum public ownership rule. That would be triple the computed 10 percent of 1,087,082,024 shares at 108,708,202 shares.