The public and their non-existent multibillion-peso wealth



The rule of the Securities and Exchange Commission (SEC) requires listed companies to allocate to the public a minimum ownership of 10 percent. Does it cover all kinds of shares, such as voting and non-voting preferred shares that compose the outstanding capital stock of a listed company?

The question is addressed to the five members of the SEC’s regulatory body, who may never answer anyway, because they may be very busy attending to other matters that require either their personal or official consideration.

Nevertheless, for the sake of the public, Due Diligencer did a series of computations to get the equivalent of the public ownership in the Zobel-owned Ayala Corp. (AC) for illustrative purposes.

As listed on the website of the Philippine Stock Exchange (PSE), Ayala Corp. has outstanding common shares of 619.611 million, of which 616.233 million are listed. That leaves 3.378 million common shares not available for public trading.

Here is another computation to, at least, theoretically show the wealth of the public based on AC’s market capitalization of P470.285 billion as of Dec. 23, 2015. With their 10-percent holdings equivalent to P47.028 billion, this makes the public, as a company stockholder, a multibillionaire many times over.

Philippine Long Distance Telephone Co. is another good example. Of its 218.78 million issued common shares, 216.056 million are outstanding, though the company has 233.926 million listed shares (this needs further research; perhaps some treasury shares have not been retired and remain listed?). PLDT claims a free float level of 53.86 percent, which should qualify it as a public company, but it is actually not, because every PLDT common share is held by the Salim-owned, Hong Kong-based First Pacific Co. (note to Emi: please confirm the number of listed shares is higher than the number of issued common shares)

This ownership profile deprives the public of its 10-percent minimum ownership, which SEC officials have never questioned at all.

Theoretically again, if the public were to own 10 percent of PLDT’s 216.056 million outstanding common shares, they would hold 21.606 million. This ownership would make the public stockholders very rich because their holdings would have a market value of P44.853 billion, computed on the stock’s closing price of P2,076 on Dec. 23.

How about SM Investments Corp. (SMIC), the listed holding company of businessman Henry Sr. and his family? It has 803.055 million outstanding shares, of which 46.17 percent, or 370.77 million shares, are classified as the stock’s “free float level,” or publicly owned. At P865 per share, this big block is worth P320.716 billion.

Another way to calculate the wealth of SMIC’s public stockholders is to compute 10 percent of the stock’s market value of P694.643 billion. The result: P69.462 billion worth of shares, which should make the public very rich.

Businessman John Gokongwei Jr. and his family own JG Summit Holdings Inc., which has 7.163 billion outstanding common shares, with 36.5 percent, equivalent to 2.614 billion shares, classified as the “free float level.” At JGS’ closing price of P73.50 on Dec. 23, the publicly held shares had a market value of P192.165 billion.

On the other hand, 10 percent of JG Summit’s market capitalization of P526.469 billion would be equivalent to P52.647 billion.

Whichever computation you pick, both of these results show the same conclusion: most of the public stockholders that own shares in JG Summit and other listed companies are also very rich.

How about the Aboitiz Equity Ventures Inc., a holding company owned by the Aboitizes of Cebu? It is also listed and has been successfully competing with Manila-based conglomerates in marketing itself as the more preferred listed stock. The PSE website classified 46.86 percent—equivalent to 2.603 billion—of its 5.554 billion outstanding common shares as the “free float level.”

Let’s just focus on the SEC’S 10-percent minimum public ownership rule: Of Aboitiz’s 5.554 billion outstanding common shares, 555.427 million should be owned by its public stockholders.

All the ownership profiles of the companies as described above raise a lot of questions that only SEC officials would be able to answer. However, if no one among them would take up the cudgel for the public, Due Diligencer would try to dig deeper into these posers and define what is public and what is not.

If anyone among the individual investors who trade on listed stocks has any idea about, or definition of, the word “public,” he or she is welcome to air his or her suggestions on how to make listed companies also public.


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  1. Claro Apolinar on

    Mr. Perez, thank you for trying to enlighten us with your columns. Who wrote that note –(note to Emi: please confirm the number of listed shares is higher than the number of issued common shares)–in the middle of your column?