How Indonesian-owned First Pacific controls MPIC


Emeterio Sd. Perez

THE Securities and Exchange Commission (SEC) should strictly monitor the listed companies’ compliance with the 60-40-percent ownership law. By doing so, it could efficiently implement the regulatory requirements, even for stock corporations that are not listed on the Philippine Stock Exchange (PSE).

The 60-40-percent ownership profile should also be reviewed to find out if Filipinos control at least 60 percent of the outstanding capital stock of the companies that are on the restricted list. It is up to the SEC and the PSE how they do the monitoring but they should see to it that the restricted companies follow the law.

Perhaps, foreigners find this ownership requirement too rigid for their money. Nevertheless, some of them manage to circumvent it by investing through thick layers of ownerships.

Once they have Filipinos as 60-percent partners, they could find ways of ending up having control of Filipino companies.

Majority owners

For example, in a restricted company with 100 million outstanding common shares, the foreigners’ 40-percent ownership means they could hold up to 40 million common shares.

But what if foreigners also try to invest in the remaining 60 percent through an investment vehicle in which they hold 40 percent of the outstanding common shares?

In that case, the ownership could be computed this way: 40 percent of 60 million common shares (100 million shares minus 40 million shares) would be equal to 24 million common. By adding 40 million common and 24 million common shares, their holdings would total 64 million common shares, which would be equivalent to 64 percent of 100 million outstanding common shares.

As the saying goes, the more the merrier. That is, if more companies with 60-40-percent ownership profile in favor of Filipinos would invest in the same company, they would even tighten their control of what is considered to be a Filipino stock corporation.

Another computation

Here is another way of computing the company ownership to show how foreigners could strengthen their holdings not only of one stock corporation but probably more. As 40-percent owners of two investment vehicles, their ownership structure in a Filipino company with 100 million outstanding common shares will be as follows: 40 percent of 100 million equals 40 million common shares; 80 percent (40 percent each for two 60-40 percent corporate vehicles) of the Filipino-owned 60 million common shares equals 48 million common shares. Adding them all up, the foreigners’ holdings would be, 40 million common shares plus 48 million common shares equals 88 million common shares in effect.

By dividing 88 million common shares by 100 million common shares, the computation would result in 88 percent ownership of 100 million outstanding common shares of the Filipino company in favor of the foreigners. Thus, Filipino stockholders would be left with 12 percent, which would be equivalent to 12 million common shares.

Another example that is not theoretical but based on actual ownership: As of Feb. 28 this year, the outstanding capital stock of Metro Pacific Investments Corp. (MPIC) consisted of 31.504 billion common shares and 9.128 billion Class A preferred shares, for a total of 40.632 billion common shares.

In a definitive information statement (DIS), Metro Pacific said the holders of common and preferred shares in its capital stock enjoy voting rights.

Controlling stockholders

The Indonesian-owned First Pacific Co Ltd. of Hong Kong is not listed as an MPIC stockholder. Instead, Metro Pacific Holdings Inc., which First Pacific owns, holds for it 13.223 billion MPIC common shares, equivalent to 41.972 percent of 31.504 billion outstanding MPIC common shares, and 32.543 percent of 40.632 billion outstanding shares.

Metro Pacific Holdings also holds for First Pacific 9.128 billion Class A preferred shares, which are all outstanding, and that makes First Pacific the majority stockholder of MPIC, with total indirect holdings of 22.351 billion shares, or 55 percent of outstanding 40.632 billion shares.

First Pacific should have been limited to owning the equivalent of only 40 percent of outstanding capital stock, but topped the allowable limit by 15 percent.

Metro Pacific Holdings, according to SEC files, is classified in an MPIC filing as a Filipino company. This would mean First Pacific owns only 40 percent of its outstanding capital stock while Filipinos hold the majority ownership of 60 percent.

In addition, PCD Nominee Corp. holds 9.104 billion MPIC common shares for foreigners, which, when added to Metro Pacific Holdings’ 22.351 billion shares, equals 31.455 billion MPIC shares, or 77.414 percent of 40.632 billion outstanding 40.632 billion shares.

Who could be the nominees that as record stockholders, hold MPIC common shares for First Pacific? Remember that First Pacific, through Metro Pacific Holdings, controls MPIC and the 15-person board. If First Pacific is MPIC’s majority stockholder, how come the company’s public ownership report as of Sept. 30, portrayed the public as significant stockholders with 13.316 billion MPIC common shares, or 42.26 percent of 31.51 billion outstanding common shares? Just asking.


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