READERS of The Manila Times react to issues written about. They are generous with their praises when they agree with what you say and always ready to voice out their disagreement. Regarding disclosures of listed companies, if I make some elaborations, my intention is only to interpret the disclosures into easily understandable layman’s language.
But it is not always that I write as clearly as I should have done and I think I have to explain some topics which drew several comments from readers.
Zobel’s P97-B paper wealth
When I write about the paper wealth of significant or majority stockholders of listed companies, I don’t intend to embarrass them. Rather, my intention is only to inform that so and so owns so much, for the public to closely monitor their trades.
As for the taxes due the holdings of these stockholders, a reader who goes by the name of “Aces,” asked in a posting on Jan. 14 on the website of the Philippine Stock Exchange why a family would “amass wealth and yet escape scrutiny (audit) while Pacquiao, who has enriched himself thru hard work (honest work) was being castigated without mercy by Kim Henares of the Bureau of Internal Revenue.” The two words inside the pairs of parentheses belong to Aces.
Lito Cruz also defended Pacquiao from harassment by Henares and the Philippine Inquirer. “Pacman is a national treasure but these people do not get it,” he wrote.
Aces was reacting to the P97.2-billion paper wealth of businessman Inigo Zobel who is the majority stockholder of Top Frontier Investment Holdings Inc. and San Miguel Corp. The amount represents the market value, that is, paper value, of Mr. Zobel’s holdings in the two companies, which are taxable ONLY when he sells them.
Of course, Mr. Zobel is not selling. For the information of Aces and other readers stockholders withhold taxes due from sale of shares.
As for Henares harassing boxing champion Manny Pacquiao, I agree with Aces that the BIR chief is being selective in the agency’s tax collection drive. Ask those who do not agree with her kind of management.
On January 1, a certain JT wrote: “I don’t see the issue on individuals buying and selling their shares.” He/she also expressed his views on the use of “subcontract workers” but which I did not take up in Due Diligencer. As a matter of fact, JT was only reacting to a comment made by another reader.
Since I did not write about “subcontract workers,” I will explain only the inclusion of “insiders’ trades” in Due Diligencer.
Without full disclosure, the public investors would be at a very big disadvantage. As a matter of fact, they would be at the losing end of every trade when they either buy shares from or sell shares to insiders.
Insiders, as defined under the rules, are usually privy to what’s going on inside the company, particularly inside the boardroom.
Here is theoretical example: As the market opens trading, the members of the board of a listed company are about to approve the declaration of a special dividend in addition to the regular dividend. Suddenly, the stock registered an unusually big “buy volume” triggering the public to ask the most basic question that outsiders ask: Why?
No one could provide the answer until a few hours later, an urgent disclosure came informing the exchange on the board approval of the company’s special dividend of say P2 per common share.
This is the reason for the “insiders’ trades” in Due Diligencer. I want the ordinary investors among the public to know who among insiders are either buying or selling the shares in their companies. I understand, the Securities and Exchange Commission has its own market monitoring team closely watching the market’s daily trading for any sign of “unusual behavior’ of a particular stock. When SEC watchers detect any suspicious trading, they call the attention of the PSE team to do some investigation.
One might ask how Ysmael Baysa, vice president-finance and chief financial officer of Jollibee Foods Corp. (JFC) was sold by the company 100,000 JFC shares at only P39.85 per share. He sold the same block for P211.012 per share that grossed him a profit of P17.116 million.
If anyone among the public would not know the reason for such huge bonanza, then Due Diligencer suggests that JFC do the explaining by spelling out ELIP in the trade filing. The four letters stand for executive long-term incentive program which the company’s executives receive in return for their loyalty.