THE Philippine Stock Exchange (PSE) and the Securities and Exchange Commission (SEC) should promulgate a rule penalizing the management and not the listed companies for violating the market’s transparency rules. To continue with their practice of forcing the companies to shoulder the penalties, the PSE and the SEC would, in effect, punish the public investors and not the irresponsible executives.
Any amount taken from the earnings of a listed company, be it part of regular expenses or a monetary fine, would mean a reduction—even if slight—in the amount of dividends for stockholders.
Just imagine how a P2 million or more fine imposed on a listed company would impact on the declaration of dividends to be taken from retained earnings? The amount would be a lot given the few centavos that some, if not most, public companies declare as dividends benefiting only the majority stockholders because they own most up to 90 percent or more of outstanding shares.
And what if the company could never give out dividends, because it has been losing since the government takeover in 1986?
Let us take a look at Philippine National Construction Corp. (PNCC) and try to sympathize with its public stockholders who have for years been stuck to their worthless stock certificates, because PNCC has never recovered from its deficits that had run to more than P9 billion.
The two filings culled from the website of the Philippine Stock Exchange would partly explain why PNCC is where it is now, and how its fate remains unpredictable in the face of its annual losses.
Too late. The Malacañang-appointed executives of the government-controlled PNCC, it seems, prefer penalties to complying with the full disclosure rules of the Securities and Exchange Commission. If not, then how could they have failed to inform the SEC of the “election of Jose Vicente Bengzon as acting chairman” and to file a certificate of PNCC’s compliance with Manual Corporate Governance?
It would appear that the managers installed by President Benigno Aquino 3rd, who has placed PNCC under him, have even committed a more serious offense because they posted on September 26, 2013, their filing dated September 13, 2013, on the payments of a total fine of P113,400 for the two violations by PNCC made on March 8, 2012, and May 16, 2012.
How could the responsible officers of a company listed at the PSE be so late in filing a simple disclosure as the appointment of an acting chairman, and the submission of a “sworn certificate in compliance with Manual Corporate Governance?” Is it because PNCC’s payments are not deductible from their salaries?
It is time the SEC penalizes the management and not the company for late filing of disclosures.
Rosalyn Delivios, corporate information officer, signed the late PNCC’s posting.
Joint venture. On November 4, 2013, the board of PNCC approved a planned joint venture with a subsidiary of Metro Pacific Investments Corp. Then on January 27, 2014, PNCC reported the execution of said joint venture deal on the construction of “an 8-kilometer road that will connect to the Harbor Link of NLEX [North Luzon Expressway] and South Luzon Expressway.”
So far that’s the good news.
But the bad news is the cost of the project which P18 billion. A joint venture is supposed to mean 50-50 sharing on the cost. But nothing has yet been disclosed on this. Instead, the filing limited the disclosure to the “provisions on profit-sharing” under which “PNCC will get 6-percent revenue share from the project.”
If the deal is a joint venture, as PNCC said so in the filing, then why does it only provide “6-percent revenue” for PNCC? Does this mean Metro Pacific group will get 94 percent?” Is this an accommodation for the government, because PNCC has no money to share in the P18-billion project cost?
In its quarterly report ended June 30, 2013, which is its latest financial filing, PNCC reported a deficit of P9.79 billion and capital deficiency of P1.62 billion. If the company would share in the P18-billion road project, where will it get the money? Will President Aquino tap the Development Bank of the Philippines and the Land Bank of the Philippines for financing?