Listed companies are not public


Emeterio Sd. Perez

THE public ownership reports (PORs) posted on the website of the Philippine Stock Exchange portray listed companies as also public. Are they?

It is up to the public investors who trade on listed shares to judge for themselves if the listing by companies of either all or only some of their common shares also makes them public. As far as Due Diligencer is concerned, such companies are never public. Only the PORs qualify them to be so.

Nevertheless, the public stockholders of these listed companies are in the market not necessarily to get elected to the board. Rather, most of them buy and sell shares to make money. Others prefer to invest in listed stocks for dividends, either in cash or in stock.

Instead of the public seeking the seats that belong to the public, the majority stockholders snub them in favor of independent directors, who generally agree to go with them in voting for or against any issue taken up by directors inside the boardroom.

Following are three examples of traded stocks in which the public are credited more than the number of shares they actually own.


San Miguel Purefoods Co. Inc. reported in a POR as of Dec. 31, 2016 that it has issued 170.875 million common shares. Of the issued shares, the company said, 4.208 million are treasury shares, leaving 166.667 million as outstanding shares.

Of the outstanding common shares, San Miguel Corp. owns 142.279 million shares, or 85.37 percent. Its ownership makes Purefoods an SMC subsidiary.

The nine members of Purefoods’ board hold a nominal common share each, or 0.02 percent, while “several individuals not related to the company” own 51 common shares.

In addition to his ownership of a nominal common share, Francisco S. Alejo 3rd also indirectly owns 43,000 Purefoods common shares.

With SMC as the majority stockholder with 142.279 million shares, or 85.37 percent, its nine directors and other individuals owning a total of 60 shares, the public hold the remaining 24.345 million common shares, or 14.61 percent.

Zobels’ holdings company

The public stockholders of Ayala Corp. (AC) own 249.669 million common shares, or 40.25 percent of 620.225
million outstanding common shares. Their ownership of common shares dwarfs the 63.078 million AC common shares, equivalent to only 10.17 percent, held by Mitsubishi Corp.

Mermac Inc. holds 303.689 million common shares, or 48.96 percent. Its holdings make the public as AC’s second biggest stockholder. It is the unlisted but ultimate parent of the listed companies owned by the Zobels.

The seven members of AC’s board hold 472,865 AC common shares, or 0.08 percent, of which they directly own 271,539 common shares. Of these directors named in the POR, Ramon R. del Rosario Jr. directly owns a nominal share, while Yoshio Amano, Mitsubishi’s nominee, indirectly holds one AC share.

The POR listed 19 insiders as owners of 1.896 million AC common shares, or 0.3 percent. It credited Jaime Augusto Zobel de Ayala and his brother Fernando with 136,396 AC common shares, or 0.02 percent, and 177,846 AC common shares, or 0.03 percent.

Other insiders who avail themselves of AC’s stock option plan are subscribers to 1.419 million AC common shares, or 0.23 percent.

Aboitiz group

Aboitiz Equity Ventures Inc. (AEV) is the listed holding company of the Aboitizes family. It said its core businesses are “grouped into five main categories” such as “power distribution, generation and retail electricity supply; financial services; food manufacturing; real estate; and infrastructure.”

AEV has 5.695 billion issued common shares. Minus 60.807 million treasury shares, the company is left with 5.634 billion outstanding common shares.

Aboitiz & Co. Inc. is AEV’s principal stockholder, with 2.736 billon common shares, or 48.56 percent. Three affiliates combine for 1.572 million common shares, or 0.03 percent.

AEV’s nine-person board holds 207.614 million common shares, or 3.69 percent, while the company’s 14 officers own 67.617 million shares, or 1.2 percent.

With the nine members of AEV’s board, insiders and affiliates having 3.012 billion common shares, the company’s POR attributed to the public stockholders the ownership of 2.621 billion common shares, which are equivalent to 46.53 percent.

Independent directors

Of the three listed companies, only Purefoods reported what could be a more realistic number of common shares as being owned by its public stockholders. The attribution of 40.25 percent and 46.53 percent to the public by AC and AEV, respectively, is, to say the least, misleading.

All of these three listed companies don’t recognize the right of their public stockholders even to a board seat. Instead, they are more generous to independent directors whose nominations get approved by the majority.
For the information of the public, Purefoods has three independent directors, namely Carmelo L. Santiago, Edgardo P. Cruz and Minita V. Chico-Nazario. Of AC’s seven directors, three are independent. They are Antonio Jose U. Periquet, Ramon R. del Rosario Jr. and Xavier P. Loinaz. The Aboitizes also elect every year three directors as independent to their nine-person board. For the current year, they are Stephen T. CuUnjieng, Rafael P.M. Lotilla, and Jose C. Vitug.

Due Diligencer’s take on independent directors in another piece.


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