Senators should study SEC documents before asking questions

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Emeterio Sd. Perez

Emeterio Sd. Perez

AN aide to then Chairman Julio Sulit of the Securities and Exchange Commission knew so much about securities that certain SEC officials—and even outsiders—used to call him a “consultant.” If only he were still alive today, he would have been a good and reliable resource person of the Senate in defining for the senators the capital stock of stock corporations registered with the SEC.

As a matter of fact, said “consultant” could have easily educated Congress on authorized capital stock (ACS) and the required percentage of subscription of said ACS. In turn, he could also include in a lecture how much of the subscribed capital stock should be paid up.

In short, because said consultant was only a janitor when he joined the SEC many years ago until his retirement at age 65—again, many years ago—he spoke the language of a layman and it is from him that I learned so many of the things I write about today in Due Diligencer.

A company’s capital stock may look complicated—even to a neophyte member of the overpopulated SEC’s five-man body that, incidentally, needs only three or even fewer members to be able to function efficiently and effectively—but it is not. As a matter of fact, a capital stock is so easy to relate with money.


Incidentally, when a stock corporation goes public, the website of the Philippine Stock Exchange (PSE) does not show anymore the ACS details. For the public to better appreciate the contents of PSE’s website, let us look at Central Azucarera de Tarlac Inc. (CAT). As posted, CAT has 28,253,876 outstanding shares out of 28,254,596 issued and listed shares, with the difference of 720 classified in financial filings as treasury shares.

This means that all of CAT’s issued and listed shares are available for selling and buying by the public. This availability, as a matter of fact, enabled a new group to buy out the Cojuangcos of their majority holdings and take over the company last year.

The ownership profile of what was once a Cojuangco-controlled CAT illustrates a public company with all its issued and outstanding shares listed, including the treasury shares.

What if a certain block of shares in a listed company is not listed?

Let us look at the listing profile of Apex Mining Co. Inc. First, as posted on the PSE website, Apex has 6.2 billion issued and outstanding shares, divided into 1.68 billion shares that are listed and 4.54 billion shares that are unlisted. One may further seek an elaboration of Apex’s outstanding capital stock, divided into listed and unlisted, that could be easily explained by another filing, defined as a public ownership report (POR). This report refers to a disclosure on the percentage of public ownership of listed companies, which is pegged at a minimum of 10 percent of outstanding shares.

Finally, the listing profile of Globalport 900 Inc. should illustrate for the public what to expect from such a large number of issued and outstanding shares of 2.1 billion shares, of which only 54.2 million or 2.51 percent is listed. Even if the computation would exclude 201,500 treasury shares, the result would still be way below the 10-percent minimum public ownership (MPO) rule.

The question that the public would ask is: If this ownership profile would not qualify Globaport as listed and public, is there a way of correcting the violation of the 10-percent MPO rule?

Yes, this could be easily remedied if the company’s majority stockholders are willing to dilute their holdings by selling a few more Globalport shares to the public, to the extent needed to meet the 10-percent MPO.

The public need not ask me who, then, are the majority stockholders of Globalport, because my answer would be: Don’t be like the senators of this republic who keep on asking for the ownership details of a stock corporation.

These men of Congress, who are supposed to be honorable and learned, could facilitate the question-and-answer forums, ironically called public hearings, by asking the SEC for the relevant corporate files. Then they could pore over the SEC documents and ask their resource persons whatever details, in their personal judgment, are not clearly disclosed. Perhaps they could also ask anyone from the SEC rank-and-file to explain to them the composition of a company’s authorized capital.

Don’t the members of the Congress, which is turning out to be a subsidiary of Malacanang, Inc. and not as an independent and separate entity, not realize that in their grandstanding to earn media exposure, they are wasting the people’s money and taxing the public’s patience?

By the way, I dare Sen. Sergio Osmena 3rd to ask ABS-CBN Corp. for the identities of the public investors who own 389 million shares, or 45 percent of the broadcast conglomerate’s outstanding shares. He could also elaborate on this by asking the board who among them represents the interest of the minority stockholders on the 11-man board? I am only begging him for answers to know if he has the guts to question the Lopez-controlled listed company about its ownership profile.

esdperez@gmail.com.

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