Unreliable ownership disclosures

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Emeterio Sd. Perez

IF the public were to rely solely on public ownership reports posted on the website of the Philippine Stock Exchange, they would be misled by the ownership profiles of listed companies.

They may want to take a closer look at the list of stockholders of Metropolitan Bank and Trust Co. and they would know why listed companies prefer PORs in presenting the list of their stockholders.

As its POR shows, Metrobank has 3.18 billion outstanding common shares, of which 841.732 million common shares, or 26.468 percent, belongs to GT Capital Holdings Inc. (To get the percentage equivalent, Due Diligencer divided 841,731,945 by 3.180,172,786= 0.26468, or 26.468 percent. Due Diligencer did similar recomputations as needed for the other POR entries.).

The bank’s other stockholders are the 12 members of the 12-person board, 35.712 million common shares, or 1.123 percent; officers and affiliates, 363,326 common shares and 744.221 million common shares, respectively, equals 744.584 million common shares, or 23.413 percent.


All these Metrobank common shares owned by GT Capital, 12 directors, other insiders and affiliates total 1.586 billion common shares, or 49.881 percent. This makes the public the majority stockholders, with 1.594 billion common shares, or 50.119 percent. (Metrobank’s POR placed the ownership data at 99.863 percent only and not 100 percent because of the omission of certain percentage equivalent.)

Unreliable POR

With its public stockholders owning 1.594 billion common shares, or 50.119 percent, Metrobank would have ended up being more public than others. As a matter of fact, at the stock’s last traded price of P81.50, the public became very rich, with paper wealth of P129.911 billion. Only P650 million separates them from the combined paper wealth of GT Capital directors, company insiders and affiliates.

Metrobank’s ownership profile illustrates the unreliability of PORs in measuring the voting power of the public. It is even worse if the public stockholders were to scrutinize the composition of the bank’s board. They would realize that the 26.46 percent holdings of GT Capital would make it only a minority stockholder entitled to minority membership in Metrobank’s 12-person board.

How come GT Capital every year elects Metrobank’s 12 directors, including five independent directors? What happens to the holding of the public stockholders who trade on listed stocks but are not allowed to elect their nominees to the board?

By the way, GT Capital does not have the monopoly of electing all members of a company board. Other listed companies do likewise, making it appear in their PORs that they are more public than others when they limit their public stockholders to owning common shares.

Only 6 directors

Double Dragon Properties Corp. has 2.23 billion outstanding common shares. In a POR, it listed two principal or substantial stockholders—Honeystar Holdings Corp. and Injap Investments Inc., with 824.997 million common shares each, or 37 percent. The seven members of the board hold a combined 8.52 million common shares, or 0.38 percent.

All in all, DoubleDragon’s two principal stockholders and the seven directors own a total of 1.659 billion common shares, or 74.382 percent. This leaves the public with 571.216 million common shares, or 25.618 percent.

How come DoubleDragon shows in its POR the Jollibee group and the Sias (who own Injap) holding the equivalent of 37 percent each, or 74 percent combined, yet elect ALL eight members of the board, including two independent directors?

Again, this ownership profile that DoubleDragon shows in its POR does not reflect 100-percent control by the two substantial stockholders. Yet, they divide between them the nominees to the eight-person board, including two independent directors.

Try getting 74 percent of eight directors and you will arrive at only 5.92, meaning Honeystar and Injap should have been entitled to only six directors and not eight. How come the Jollibee group and the Sias elect all eight directors? Will try to research on this for another piece.

esdperez@gmail.com

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