THE Supreme Court has laid down the 60-40 ratio of ownership in a listed company. It said the computation in favor of Filipino owners must be applied separately in each class of shares. As to the total, the High Court has so ruled in what is now known as the Gamboa case that the same ratio must also be applied to it. That is, at least 60 percent of the outstanding capital stock, even if composed of other classes of shares than common shares, should be owned by Filipinos.
Let me go to specifics based on a general information sheet (GIS) filed with the Securities and Exchange Commission. A GIS contains the authorized capital, the list of stockholders and their individual holdings, among a number of entries.
A GIS posted on the website of the Philippine Stock Exchange should be the basis of computing the ownership profile of Globe Telecom Inc., which is supposed to be the telecom subsidiary of the Ayala group owned by the Zobel family.
Globe Telecom’s GIS filed on May 13 showed the composition of the company’s authorized capital stock as follows: 148,934,373 common shares; 160 million voting preferred shares; and 40 million non-voting preferred shares, for a total of 348,934,373 shares.
Of the authorized capital stock of 348,934,373 shares, 311,257,788 shares are paid up. Until here, there is no doubt about the composition of the outstanding capital stock. The test of whether or not Globe Telecom’s ownership profile is in conformity with the SC ruling is another matter.
If the SC definition of the 60:40-percent ownership ratio is to be applied to Globe Telecom as shown in its own GIS, the computation should be as follows: 60 percent of 132,742,767 outstanding common shares = 79,645,660; 60 percent of 158,515,021 voting preferred shares = 95,109,012; and 60 percent of 20 million non-voting preferred shares = 12 million.
If Filipinos control 60 percent of each class of Globe Telecom’s outstanding shares, then the foreigner-owned 40 percent would be as follows: 53,097,107 common shares; 63,406,009 voting preferred shares; and 8 million non-voting preferred shares.
Do the results of these computations tally with the numbers reported in Globe Telecom’s GIS?
As re-computed, Filipinos’ ownership of 50,181,208 common shares equals 37.803 percent of 132,742,767 outstanding common shares. To make up for the shortfall in the Filipino ownership against the 60 percent minimum, Globe Telecom issued them all of its 158,515,020 voting preferred shares, in addition to 19,886,200 non-voting preferred shares, or 99.431 percent.
As far as each class of shares is concerned, Globe Telecom is fully compliant with the 60-40 ratio in favor of Filipinos who were credited with the ownership of 19,886,200 non-voting preferred shares, or 99.431 percent of 20 million outstanding non-voting preferred shares; and 100 percent ownership of voting preferred shares.
Following the SC’s definition of the 60-40 percent ownership ratio, however, Globe Telecom does not meet the legally required ownership of common shares of which Filipinos own only the equivalent of 37.803 percent, which is 22.197 percent short of the legally required 60-percent minimum ownership.
Foreigners, on the other hand, control 82,561,559 common shares, equivalent to 62.197 percent of 132,742,767 outstanding common shares. The same GIS specified the nationalities of foreigners who control Globe Telecom’s outstanding common shares, such as three Singaporeans with 62,646,491 common shares, or 47.194 percent; and 27 others, referring to foreigners other than Singaporeans, 19,915,068 common shares, or 15.003 percent.
Finally, Singapore Telecom International Pte. Ltd. is identified in the GIS as holder of 62,646,587 common shares, or 20.127 percent of 311,257,788 outstanding capital stock of Globe. Ayala Corp., on the other hand, owns 40,351,591 common shares, or 12.964 percent.
Even the information statement posted on the website of the Philippine Stock Exchange showed foreigners’ control of the outstanding common shares of Globe Telecom. In it, foreigners were listed as holders of 81,978,459 common shares, or 61.757 percent of 132,743,967 outstanding common shares.
Also worth noting: the number of outstanding common shares of a listed company varies because of either a buyback, which reduces it, or additional share issuance, as in compliance with an employee or executive stock option plan, which increases it.
A further note: SBS Philippines responded to Due Diligencer’s suggestion for it to answer an email of a reader of The Manila Times, which appeared in this space last Friday. Its letter will come out in my next piece.