AS the securities industry regulator, the Securities and Exchange Commission (SEC) is tasked to protect the investing public. But it seems the overpopulated commission did not have the courage to save Greenery Holdings Inc., being a listed and public company, from politics.
So that the public would know the supposed regulators, the five members of the commission are Chairperson Teresita Herbosa and Commissioners Manuel Huberto Gaite, Antonieta Ibe, Ephyro Luis Amatong and Blas James Viterbo.
Ironically, nothing has been heard from the two top officials of the Philippine Stock Exchange (PSE). Jose Pardo, PSE chairman of the 15-person board, is also one of three independent directors, while Hans Sicat is president and chief executive officer. These two market watchers chose to remain silent after the Court of Appeals issued a freeze order on Greenery Holdings because the company is owned by businessman Antonio Tiu.
Apparently, like SEC’s Herbosa and her fellow commissioners, Pardo and Sicat would not care at all—so it seems—if a court were to freeze Tiu’s wealth. Why should they? They have nothing to do at all with the businessman’s fate. But they should have stood up for the public stockholders of Greenery Holdings who are endangered by political incursion. They should have known that without the public, there would have been no stock market and no Philippine Stock Exchange Inc. as a stock corporation to speak of, and no PSE to hire them.
In short, what have the public investors got to do with Mr. Tiu’s Greenery shares? Nothing. They only happened to be stockholders because the company is public and its shares are openly traded.
As the SEC chief, Herbosa leads the commission in deciding issues pertaining to and affecting the local stock market. She and her fellow commissioners are responsible in protecting the public from unscrupulous market operators engaged in nefarious practices such as price manipulation.
The question is, have SEC officials been living up to the task attached to their titles? If they have failed the public, why should they take interest in a court’s freeze order on a listed company?
Caught in between
The public stockholders of Greenery Holdings are caught between two warring factions of politicians. With the situation seen to get even worse as the controversy is not expected to end soon, individual investors are more likely to end up frustrated by the continued absence of the regulators in this case. Right now they are dismayed by the lack of concern from the SEC and its five commissioners, who feel they do not have any mandate to prevent the effects of dirty politics from trickling down to the stock market.
If nobody from the SEC and PSE would explain to the public the impact of the Appeals Court’s freeze order on them, then who would? Due Diligencer does not have the answer.
For the information of those outside the SEC and PSE, here is Greenery Holdings’ ownership profile as shown in a filing posted on the PSE website. Earthright Holdings Inc., which is owned by Mr. Tiu, holds 473.5 million Greenery shares. In addition, the businessman directly owns 10,000 shares. The total—473.51 million shares – is equivalent to 26.3 percent. ThomasLloyd Cleantech Infrastructure Fund, a German company, holds 207.77 million shares, or 11.54 percent. This leaves the public owning 1.105 billion shares, or 61.37 percent.
These disclosures should make Mr. Tiu only a significant stockholder and not a majority stockholder. It is up to the government to establish his 50-plus-one-percent or more majority ownership by patiently perusing company files and PSE postings.
With Mr. Tiu’s ownership already computed, what then does public ownership in listed and public companies mean?
The question could be answered by assumption. If the public owns 10 percent in Greenery, their ownership should be significant enough to merit consideration by the SEC and PSE officials. Well, if they would refuse to learn what is “public” and what is not, here is the implication of public ownership in a listed company.
Public investors’ ownership of 10 percent of the outstanding capital stock of a listed company should translate to equal participation in assets and liabilities. For the same reason, they should also be entitled—indirectly, of course—to 10 percent of whatever cash in hand a listed company reports in its financial filings. The recitation could go on as long as financial filings would require.
In the meantime, what if Greenery Holdings has retained earnings? Would the court allow it to use its cash in paying dividends either in cash or in stock? Unluckily for its stockholders, the company reported a deficit of P293.3 million as of March 31, 2015. But it also listed under equity additional paid-in capital (APIC) of P268 million. Will the court allow the company to use its APIC to partially wipe out its deficit?