Listed companies not really public

Emeterio Sd. Perez

Emeterio Sd. Perez

THE ownership profile of Manila Water Co. Inc.  (MWC) is the “best example” of companies listed at the Philippine Stock Exchange (PSE). It has only two stockholders such as Ayala Corp., which owns 652.11 million shares, or 32.38 percent, and the public, who, as a group, holds 1.32 billion shares, or 65.70 percent. The rest are owned by MWC insiders.

With only two owners, a significant stockholder and the other the majority owner, MWC would be a big puzzle to foreigners who are used to knowing who controls which and who owns what. At a glance, the water retailer, which distributes potable water, is controlled by the public investors and not by the Zobels when the reverse is true. Despite their listed ownership of only 32.28 percent, the family controls the company and its board.

How does this misinformation happen when listed companies, including MWC, are covered by the market’s policy of full transparency? The answer is easy to find in the public ownership regulatory filing that tends to only impress but not to tell the real story behind the numbers. How could a stockholder with listed ownership equivalent to only 32.28 percent of outstanding shares control the entire 11-man board composed of the Zobel brothers and their nominees?

What happens to the representation in MWC’s board of the owners of 65.70 percent?

The question is best addressed to the Securities and Exchange Commission (SEC), which, as the securities industry regulator, lays down the policies that govern the implementation of the market’s transparency rule. It is only the SEC that is empowered to require listed companies to detail their ownership filings, so as not to mislead the public investors into believing that they own a company when in fact they don’t.

Of course, it is not only MWC that may be guilty of hiding the Zobels’ majority control in PCD Nominee Corp. A number of other listed companies may be similarly engaged in using PCD Nominee in projecting themselves as publicly owned when they are not. It may not be easy to decipher the real or beneficial ownership of shares held by PCD Nominee, because the SEC requires only the disclosure of record stockholders.

Let’s take a market newcomer. Cosco Capital Inc. is the new addition to the group of companies controlled by businessman Lucio Co. In a recent posting on the PSE website, Co is listed as owner of 2.29 billion shares, or 31 percent, while Susan Co as holder of 1.78 billion shares, or 24 percent. Together, they control the equivalent of 55 percent of Cosco Capital.

Yet, they and their nominees control the company’s seven-man board. This is being public Philippine style in which outside stockholders are denied a voice in the board, while allowing independent directors chosen by the majority stockholders to enjoy the pays and perks that go with directorship.

The public after all neither control nor own even 10 percent of the outstanding voting shares in a listed company. Something must be hidden somewhere that makes the word “public” a misnomer as it is applied to a listed company.

Is it not ironic that both the SEC and the PSE define listed companies as also public when investors outside the families are, per rule, may or may not actually own the minimum public ownership of 10 percent of outstanding. Will SEC officials and PSE managers tell the public the real and beneficial owners of the record stockholders hidden in PCD Nominee? It is only by requiring the full disclosure of the identities of the beneficial owners would the PSE not be perceived to be an effective market for money laundering.


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