Ignoring the right of public stockholders


Emeterio Sd. Perez

AS the stock market’s regulatory authority, the Securities and Exchange Commission (SEC) should initiate a study to find out why some listed companies have bigger boards than others.

The poser is addressed to the SEC because it exercises regulatory supervision over listed companies. In undergoing a study, it can enlighten the public on their role as stockholders.

If the SEC were to ask business owners, it would be told that the public stockholders enable companies to list their outstanding common shares on the Philippine Stock Exchange.

Despite the significant role pf the public, it seems they and their right as stockholders are being taken for granted because they have not been allowed to elect even a nominee to the board of directors.

In other words, businesses should accommodate the public by expanding their boards. Why don’t they also elect a 15-person board as San Miguel Corp. (SMC) has been doing for years?

If SMC has 15 directors, why does SM Investments Corp. (SMIC) have only eight? As a matter of fact, A. Soriano Corp. even has a smaller board; it has only seven members.

44.3% owned by public

SM Investments is the listed flagship of businessman Henry Sy Sr. and his family. Like a few other listed companies, its public ownership report shows its public stockholders as significant stockholders, with 533.579 million common shares or 44.3 percent.

Again, the question is, if SMIC’s public stockholders own so much of the Sy-controlled holding company, does their minority but significant ownership translate to representation in the board?

If the public really held 44.3 percent of SMIC’s 803.055 million outstanding common shares, they should have been entitled to at least three board seats. As a matter of fact, 44.3 percent of eight is even more than three because it is equivalent to 3.544 directorships.

As it has been doing over the years, SMIC maintains an eight-person board, which is dominated by Sy Sr. and his three children, namely Teresita, Henry Jr. and Harley. As the owners, they also named during last year’s annual meeting Jose T. Sio as the fifth director and appointed Vicente S. Perez, Ah Doo Lim and Joseph R. Higdon as independent directors.

SMC not public

Having a 15-person board does not necessarily make a listed company, like SMC, public. As it is today, San Miguel is only listed.

As of Dec. 31, 2016, SMC reported 3.285 billion issued common shares of which 904.753 are treasury shares, leaving it with 2.38 billion outstanding common shares.

In a public ownership report as of January 17, SMC reported two principal stockholders—Top Frontier Investment Holdings Inc., 1.573 billion common shares or 66.09 percent, and Privado Holdings Corp., 373.624 million common shares or 15.69 percent.

The 15 members of SMC’s board combined for 3.864 million common shares, or 0.15 percent. Among the directors, Chairman Eduardo M. Cojuangco Jr. is the largest individual stockholder with 2.718 million common shares, or 0.11 percent. At SMC shares’ closing price of P106 on March 7, his holdings were worth P288.061 million.

In the same filing, SMC attributed to the public the ownership of 363.054 million common shares, or 15.25 percent, with market value of P38.484 million.

Back with Anscor
As beer brewer, San Miguel has been associated with the Sorianos. Of the family members, Andres Soriano 3rd was the last to hold the SMC chairmanship. He used to be president and chief operating officer.

Today, Soriano, who is an American, is back with the family business. He is chairman and chief executive officer of family-owned A. Soriano Corp. (Anscor). He is also chairman and president of Anscor Consolidated Corp. and other Anscor subsidiaries.

In a public ownership report, Anscor listed four principal stockholders led by Anscor Consolidated Corp. with 1.267 billion common shares, or 50.69 percent. The three others are Edmen Property Holdings Inc., 27.462 million common shares or 1.1 percent; MCS Property Holdings Inc., 26.514 million common shares or 1.06 percent; and C&E Property Holdings Inc., 24.931 million common shares or one percent.

In a consolidated financial filing as of Sept. 30, 2016, Anscor reported retained earnings of P14.296 billion, of which P6.4 billion was classified as “appropriated” while P2.226 billion was allocated for treasury shares, leaving P5.67 billion as “unappropriated.”

Like SMC and SMIC, Anscor is only listed but not public.



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