BEING listed is different from being public, although these terms apply to companies whose shares are traded on the Philippine Stock Exchange. One should not be confused with the other because, as I have been writing about this subject, being listed does not make a company also public.
There is no need for an example of listed companies that are not public. It is easy to conclude that none of them are public by simply reading the list of members of their board of directors. Who among these directors are public investors who are also owners of listed shares?
The answer is obvious: None.
Question: Why don’t the public investors qualify to elect their nominees to the board?
Answer: The public investors may not own enough shares. United, with their 10-percent, and maybe more holdings, they may be able to elect one among themselves.
It is not a personal crusade for me to be writing for the public investors who, anyway, are not the poor traders who need someone to fight for them. Some, if not all, of them may be richer than the nominees to the boards of listed companies.
It may even be safe to presume that even the independent directors are nominated based on the perception that they would toe the line of thinking of the majority stockholders inside the boardrooms.
The word “independent” as used to describe unqualified independent directors is a misnomer.
Let me go back to the unjustifiable use of “listed” and “public,” which are not interchangeable. Neither must be confused with the other. The majority stockholders of listed companies, who are mostly the richest Filipino families, must be told that without the public, they would have been paying much more taxes when they issue shares to themselves and their allies. Check this with the website of the Bureau of Internal Revenue and you will realize how you, as public investors, are being taken for granted by listed companies.
In short, listed companies are in the stock market for the pecuniary convenience of their owners.
The Securities and Exchange Commission (SEC) is the only hope of the public investors who may want to assert their right to be represented in the boards of listed companies. As insiders, their nominees would be able to monitor the big trades. The question that has been asked sometimes is, who would trade in big volumes if he or she is not aware of anything going on inside the boardroom?
As the regulatory authority that exercises oversight supervision over the stock market, the SEC remains the only hope of the public investors in getting a fair treatment from the majority stockholders. By fair treatment, I mean the “full disclosure of ALL material facts that, in some instances, a few are left out to benefit only the insiders.”
For instance, why doesn’t the SEC require the disclosure of the identities of the big sellers in huge transactions? As practiced, the stock market’s daily quotations limit the disclosure to the identities of the buyers, as if the sellers do not matter at all.
Without the sellers, there would be no big trades that would take place in the stock market. For the sake of transparency, disclosing the identities of both buyers and sellers must be made mandatory by the SEC.
Finally, will the present SEC officials succeed in doing away with independent directors and, instead, require the election of the nominees to the board of listed companies?