No teleconferencing for stockholders’ meetings



THE Securities and Exchange Commission (SEC) allows “teleconferencing” for meetings of boards of directors but not for stockholders’ meetings.

“Section 51 of the Corporation Code,” the SEC said, “provides that ‘stockholders’ meetings, whether regular or special, shall be held in the city or municipality where the principal office of the corporation is located, and if practicable in the principal office of the corporation.”

In Opinion No. 16-01dated Jan. 19, the SEC ruled that the pertinent provision of the Corporation Code “permits the ‘place’ of the directors’ meeting to be stipulated by laws but not in the case of a stockholders’ meeting.”

Camilo Correa, SEC general counsel who wrote the legal opinion, said that as provided for under the Corporation Code, “a stockholders’ voting and appearance cannot be conducted via teleconferencing or videoconferencing.”

However, Correa said, the SEC could allow teleconferencing or videoconferencing should Congress approve proposed amendments to the Corporation Code, including “permitting the conduct of stockholders’ meetings through electronic means.”

The SEC issued the opinion in response to a query posed by lawyer Althea F. Acas of Sedlex Professional Partnership Co.
AEV’s retained earnings
THE nine-person board of Aboitiz Equity Inc. (AEV) approved, in a meeting on March 10, 2015, the distribution of dividend of P1.11 per common share payable on April 20, 2015. The dividend was paid to the company’s stockholders who own 5.5 billion shares.

As of Dec. 31, 2014, AEV reported retained earnings of P18.15 billion, which was more than three times its 5.7 billion outstanding common shares.

At P1.11 per share, the dividend payments totaled P6.15 billion, which reduced AEV’s retained earnings to about P12 billion.

Was AEV’s dividend in 2015 in accordance with its policy of distributing “at least one-third of its previous year’s earnings as cash dividend to its stockholders in subsequent years?”

Dividend policy
In January 2007, AEV’s board approved the declaration of “at least one-third of its previous year’ earnings as cash dividend to its stockholders for subsequent years.”

Aboitiz Equity paid a P0.56-per share special dividend for a total of P3.09 billion, and P1.44 per share regular dividend, or P7.95 billion in 2013; P0.54 special dividend, or P2.93 billion and P1.27 per share regular dividend or a total of P7.01 billion in 2014; and P1.11 per share regular dividend, or a total of P6.15 billion in 2015.

When computed, its payment of P11.04 billion even exceeded its net profit of P10.473 billion in 2013; its P9.94 billion dividend payout in 2014 was equivalent to 71 percent of its P14 billion net profit in 2014; and its dividend payout of P1.11 billion in 2014 was equivalent to 46.6 percent of its P13.78 billion net profit in 2014.

Summing up, AEV distributed as dividend a total of P20.98 billion, or 54.85 percent of its combined net profit of P38.25 billion over the three-year period from 2012 to 2014.

From 2013 to 2015, AEV’s board has been paying the cash dividend in March of each year.

Additional issuances
TWO stockholders combined for 1.86 billion shares, or 83 percent, in Century Pacific Food Inc. (CPFI). As of Jan. 6, Century Pacific Group Inc. (CPG), the parent company, and Arran Investments Pte. Ltd., owned 1.61 billion shares, or 72 percent, and 245.5 million shares, or 11 percent, respectively.

In a recent posting, CPFI reported the issuance of 128.2 million shares at P17.55 per share, for a total consideration of P2.25 billion, to CPG to complete the full payment for the P4.5-billion acquisition of Century Pacific Agricultural Manufacturing Ventures Inc.

Like CPFI, the acquired company was also a CPG subsidiary.

The issuances increased CPFI’s issued and outstanding shares to 2.36 billion but diluted public ownership to 15.9 percent from 16.7 percent, and foreigner-owned shares to 18.6 percent from 19.6 percent.

Century Pacific Food classifies as public the shares it issued to insiders under the employee stock option plan, to which it has allocated 8.27 million shares. As of its latest filing, company insiders acquired 1.4 million shares at P13.75 each in 2014 and 1.06 million shares at P14.82 each in 2015.

For 2016, CPFI has yet to set the price for 400,000 shares for insiders.

At CPFI’s closing price of P15.58 per share on Friday, CPG incurred a paper loss of P1.97 per share.


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