• Reading ownership disclosures

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    EMETERIO SD. PEREZ

    EMETERIO SD. PEREZ

    LISTED companies have three lists of stockholders posted on the website of the Philippine Stock Exchange (PSE). These are the top 100 stockholders, or top 100, public ownership report (POR) and general information sheet (GIS). The first two are filed monthly, while GIS is filed annually.

    I am defining each of the three ownership disclosures based on my own observation of listed stocks. To play it fair, I am not citing the ownership profile of any company.

    Eventually, I will take up changes in the ownership of certain companies as the need arises, such as disclosure of significant changes in ownership. It is frustrating sometimes if not often for the public to find the contents in the “Statements of changes in beneficial ownership” not as detailed as they expect them to be.

    Will the rule on ownership filing change? That’s for the public to ask the Securities and Exchange Commission and the PSE if they want more inside information properly disclosed to them through www.edge.pse.com.ph.

    Top 100
    As the title suggests, Top 100 lists a company’s 100 largest stockholders. It usually starts with the names of the majority stockholders at the top.

    I qualified the filing with “usually” because PCD (Philippine Central Depository) Nominee Corp. often heads the list as record stockholder for certain stockholders only but is not required to identify the beneficial owners.

    If as public investors you want to know who are behind PCD-held shares, the details are on another page. Unfortunately, not all beneficial owners are disclosed. Instead, you will find the stockbrokers listed as holders of shares available for trading.

    Among the beneficial owners named in the PCD report are the Government Service Insurance System and the Social Security System. This suggests that the two state-run fund agencies are actively trading the contributions of their members.

    Public ownership report
    A POR is a required posting to show the number of shares the public own in a listed company. The SEC rule on minimum public ownership mandates at least 10 percent of outstanding shares should be owned by the public but does not state if the percentage applies only to outstanding common shares and does not cover the entire outstanding capital stock.

    Outstanding capital stock can consist of common shares only when this is the only class of shares a company has. It can also include preferred shares that can be classified into either voting or non-voting shares.

    Understandably, the majority stockholders and their allies not only control the ownership of voting preferred shares; they also buy them at par value but sell non-voting preferred shares at a premium over par value.

    The reason for the majority stockholders’ monopoly of voting preferred shares and the issuance of non-voting preferred shares to the public is to prevent the dilution of the owners’ voting rights.

    General information sheets
    If you as public investors want to know a more detailed ownership profile of listed companies, you should read their general information sheets (GIS).

    The SEC requires both listed and non-listed companies to submit their GIS. In this way, you would know not only who owns what but, more importantly, the number of their stockholders.

    Among other items, a GIS also contains the authorized capital stock and its composition such as common shares, voting preferred shares and non-voting preferred shares. It also lists the number of owners of common shares, voting and non-voting preferred shares, with the total representing the outstanding capital stock.

    In some cases, you will also learn from the GIS the nationalities of foreigners the number of Chinese, Japanese, British and American stockholders.

    Finally, you will be amazed at how “others” is classified under “foreign” and how it ends up owning much more than the combined holdings of the other named foreigners.

    My sin of omission
    The Due Diligencer piece, ‘Receivership for Alliance Select?’ which appeared in this space on Jan. 29, needs clarification to avoid misinterpretation of my request for an interview with Ms. Hedy S. Chua “possibly in Singapore.”

    Readers of The Manila Times might have misinterpreted the phrase inside the pair of double quotation marks and hastily concluded that I was asking for a free two-way plane tickets to and from Singapore.

    Even Ms. Chua’s lawyer, Agustin R. Montinola 4th of Romulo Mabanta law offices, could have been misled by my suggestion. I thank him for volunteering to arrange my interview with her client.

    I admit I was guilty of the sin of omission in that case, as well as in my other past Due Diligencer pieces when I found something missing from postings on the Philippine Stock Exchange.

    In short, my fault was forgetting to disclose that I already had my plane tickets to Singapore even weeks before I wrote “Receivership for Alliance Select?” This simple disclosure could have saved me from the sin of omission and from having to make this confession.

    esdperez@gmail.com.

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