Make listed companies also public


IF officials of the Securities and Exchange Commission led by their chief would find time to review the ownership profiles of listed companies, they would  probably find that some, if not all, companies that they wrongly recognize as public may not even be fully compliant with the market’s 10-percent minimum public ownership rule

They should not be surprised by their discovery because, after all, as regulators, they are presumed to know their arithmetic in computing public ownership.

By reading the monthly public ownership report (POR) posted on the website of the Philippine Stock Exchange (PSE), Chairperson Teresita Herbosa, who heads the SEC’s five-person regulatory body, and the four other commissioners would learn that the number of shares not owned by the majority stockholders is considered public. In other words, in most cases, the series of computations would arrive at only one conclusion: What the holding companies of the majority stockholders do not either directly or indirectly own belongs to the public.

To illustrate: A POR shows the Indonesian-owned First Pacific Co. Ltd. indirectly owns 99.2 million common shares, or 45.92 percent, in Philippine Long Distance Telephone Co. The 13 members of the board and other insiders hold 441,748 shares, or 0.2 percent, and 31,226 PLDT common shares, or 0.01 percent, respectively.

How about the public? Based on the same POR, the result of PLDT’s computations, the public own 116.37 million common shares, or 53.86 percent, which makes them not only PLDT’s significant but majority stockholder. The telecom giant listed in the same POR 99.68 million non-public common shares, or 44.1percent, which are held by the First Pacific group and its nominees.

The next question is: Who are the nominees of the public in PLDT’s 13-person board? The correct answer is: None.

As of Oct. 14, 2015, the company’s POR listed the following directors and their individual ownership of PLDT shares: Manuel V. Pangilinan, 245,450 shares; Helen Y. Dee, 23,135; Ray C. Espinosa, 15,743; James L. Go, 134,914; Bernido H. Liu, 1; Tadayashi Miyashita, 1; Napoleon L Nazareno, 20,229; Hideaki Ozaki, 1; Artemio V. Panganiban, 1,771; Ma. Lourdes C. Rausa-Chan, 199; Pedro E. Roxas, 231; Juan B. Santos, 2; and Tony Tan Caktiong, 1.

Identifying these nominees would show who represents which corporate stockholders in PLDT’s board. Dee is a nominee of the family-owned Malayan Insurance and Investments Corp; Miyashita and Ozaki are nominees of Japanese-owned NTT group; and Go is a nominee of JG Summit Holdings Inc. of the Gokongwei family. That’s a total of four.

By applying the simple process of elimination, the public may conclude that the rest of the members of the board are all First Pacific nominees because they do not own enough number of shares to get themselves elected directors. These are Pangilinan, chairman and soon to assume the presidency; Espinosa, Nazareno, Rausa-Chan, Santos, Tan Caktiong, Panganiban, Roxas and Ty.

From the list, it is up to the public to judge for themselves if the telecom giant is a Filipino-controlled company or is really owned by First Pacific, which has eight nominees to the board.

Here is another example: Alliance Global Group Inc. (AGI) considers itself public because its POR lists outsiders as holders of 4.3 billion shares, or 42.13 percent. Thru two holding companies, businessman Andrew Tan controls 5.6 billion AGI shares, or 54.54 percent while his four other companies directly own 273.05 million shares, or 2.54 percent, and individual insiders, less than one percent.

As with the Indonesians in PLDT, Tan controls the AGI board by appointing – nominating is the term usually used, which is wrong – the directors, including those who are erroneously identified as “independent directors”.  Has anyone of them ever talked about his or her participation in the deliberation in the boardrooms? If ever he or she did, her or his participation should be reported as a disclosure of a listed company.

Then consider this: PCD Nominee Corp. appears in the ownership posting as the company’s biggest stockholder. As of Sept. 30, 2015, it holds 3.35 billion shares, or 32.6 percent, for foreigners, and 974.7 million shares, or 9.5 percent, for total holdings of 4.3 billion shares, or 42.1 percent. Andressons Group Inc., a Tan-owned company, holds 4 billion shares, or 39 percent.

Where is the other principal or substantial stockholder of Alliance Global named in the POR? Remember, Alliance Global listed only Andressons in the top 100 stockholders report. To know the answer, the public will have to go back to the company’ POR, which named Yorkshire Holdings Inc. as the second significant stockholder with 1.58 billion AGI shares, or 15.4 percent.

As suggested, a review of the rule or rules on disclosure would provide a solution to the puzzle over the ownership profiles of listed companies. As of now, the practice is to hide the identities of certain stockholders by lodging their shareholdings with PCD Nominee, which acts only as record stockholder for the actual or beneficial stockholder. In turn, AGI’s top 100 stockholders’ list names the stockbrokers as AGI’s stockholders. What happened to the accuracy of the ownership posting?

Perhaps the SEC could make the ownership filings much easier to read and understand by requiring the disclosure of the beneficial owners of stocks entrusted to PCD Nominee and those of offshore companies that are only record stockholders.


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