Time for PSE to delete Philcomsat



‘A’ & ‘B’ shares. PNOC Exploration Corp., a government-owned corporation, still maintains the classification of its 2.002-billion-share capital stock into 1.522 billion common ‘A’ shares, or 76.024 percent and 479.751 billion common ‘B’ shares, or 23.964 percent, when this practice has long ago been discouraged, if not banned, by the Securities and Exchange Commission. Dividing the common shares into ‘A’ and ‘B’ used to be necessary in monitoring the compliance of listed companies to the 40-percent limit of foreign ownership in those engaged in partially nationalized industries such as public utilities, mining and oil exploration.

If the SEC has been urging listed companies to do away with their ‘A’ and ‘B’ shares, the recent ruling of the Supreme Court in Gamboa vs. PLDT case has made the classification obsolete because the computation of Filipinos’ majority control of at least 60 percent in public utility companies is based not only on common shares but in all voting shares to include preferred voting shares.

Aside from PNOC EC, the other listed companies that continue to have ‘A’ and ‘B’ shares are Filsyn, F J Prince, Keppel Holdings, Cebu Property, Gotesco Land, Marsteel, Imperial Resources, Benguet, Lepanto Mining and its unit Manila Mining and Oriental Petroleum.

No to ‘A” and ‘B shares. The list above should have included Apex Mining Co. but does not belong to it anymore. As of now, it has 1.071 billion common ‘A’ shares and 593.807 million common ‘B’ shares.

After 43 years, it is getting rid of the two classes of common shares. Instead, it will have just one class, which would simply be called by their generic name common shares.

In a filing posted on the website of the Philippine Stock Exchange, Apex Mining said its board approved on May 29 a resolution to abandon the two classes of common shares.

Apex A hit a 30-day high of P4.49 on April 16 and traded at P3.75 throughout the session on May 31. Apex B, which climbed to a high of P4.50 on March 21 and dropped to a low of P4 on May 24, was last traded on May 24 when it opened and closed trading at P4.

Reason for ‘A’ and ‘B’ shares. As a general rule, the common shares of companies are divided into 60 percent which should be owned by Filipinos, and 40 percent, which are allowed for foreigners and Filipinos. The imposition has been more strict with oil and mining exploration companies.

But the classification has had its downside: Foreign investors have been paying more in their acquisition of listed ‘B’ shares, which were and may still be, priced higher than ‘A’ shares.

In urging these companies to abandon the shares’ classification many years ago, the SEC said the practice was discriminatory. To illustrate: F&J Price Holdings ‘A’ hit a 30-day high of P3.96 and a low of P2.85. Its ‘B’ shares climbed to a 30-day high of P3.99 and to a low of P2.51.

No meeting. Philcomsat Holdings Corp. remains uncertain on holding its annual stockholders’ meeting this year. It did not, would not and probably could not justify the postponement as it simply informed PSE that “it is expected that the annual meeting will be convened during the second half of the current year once the issue has been resolved.”

What was the issue? It said the issue was “minimum public ownership.” If Philcomsat’s management wants to hold the company’s annual stockholders’ meeting, it should hold it and not cite compliance with the 10-percent minimum public ownership as a stumbling block to holding it.

The public investors have nothing to do with said meeting because, even if a listed company is public, they are passive and cares only about the company and its profitability. They are never privy to what’s going on inside the board room and much less privy to the plans of whichever group is in control.

Indefinite postponement. Why not indefinitely postpone the annual meeting this year of Philcomsat Holdings Corp.? After all, in the past, this has been deferred so many times.

Here are some available filings on Philcomsat’s annual meeting: On April 27, 2012, John Benedict Sioson, corporate information officer, informed PSE that the company’s board “scheduled the annual stockholders’ meeting on May 31, 2012.”

Then on May 28, 2012, Sioson told PSE that “at the request of its 81-percent majority owner, the Corporation is advising the w012 annual stockholders’ meeting scheduled on 31 May 2012.”

Sioson did not cite any reason for the postponement. Instead, he wrote: “We will advise you of the new date for the said meeting at a later time.”

Through Sioson, Philcomsat management has been giving a litany of reasons to justify the nonholding of the company’s annual meeting.

Since PSE management would not do anything to discipline Philcomsat, it may be time for the SEC to exercise its regulatory authority by ordering PSE to act accordingly and impose the necessary sanctions against Philcomsat.

The least the PSE board should do is meet and decide what action to take against Philcomsat, which remains listed but its present owners do not want to make it public.

What could be better than delisting Philcomsat?



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