• Why not lift foreign ownership limit?


    Emeterio Sd. Perez

    CEBU Property Ventures and Development Corp. has outstanding capital stock of 940.35 million shares, divided into 564.21 million common A shares and 376.14 million common B shares.

    In a definitive information statement (DIS) posted on the website of the Philippine Stock Exchange, CPV said it would hold a stockholders’ meeting at 3:00 p.m. on April 10, 2018, 19th floor, Ayala Center Cebu Tower, Bohol Cebu Business Park, Cebu City.

    “Approval by the stockholders will be sought for the merger of the company and its parent company,” CPV said in the same posting, referring to itself and Cebu Holdings Inc. (CHI).

    The merger needs the approval of at least 2/3 of the holders of the two companies’ stockholders.

    With CHI as the surviving entity, Cebu Property will be delisted and its public stockholders may be issued CHI common shares in exchange for their CPV common shares.

    Cebu Holdings owns 717.064 million CPV common shares, or 76.26 percent, according to the same information statement.

    “Pursuant to the By-laws of CHI and the Corporation Code, the board of directors of CHI has the power to decide how CHI shares in CPVDC are to be voted,” ” CHI said in an explanatory note in CPV’s and in its own filing.

    Majority stockholder

    Cebu Holdings has 1.92 billion outstanding common shares. Unlike that of CPV, its capital stock is not divided into A and B shares. It also holds office on the 19th floor of Ayala Center at Cebu Business Park.

    In a DIS, CHI listed Ayala Land Inc. (ALI) as its majority stockholder, with 1.382 billion CHI common shares, or 71.96 percent. It identified as British the beneficial owners of PCD-held CHI common shares.

    Like some other listed companies, it attributed to PCD Nominee Corp. 331.96 million CHI common shares, or 17.29 percent, only as record stockholder.

    PCD Nominee also holds 121.71 million CHI common shares, equivalent to 6.34 percent.

    As of 2017, CHI’s debt to ALI increased to P30.946 billion, or 2.08 percent of its total debt of P1.488 billion, from P22.009 billion, or 1.3 percent of total debt of P1.705 billion in 2016.

    Cebu Holdings will also hold its annual stockholders meeting at 3:00 p.m. on April 10, 2018.

    Up for re-election

    Lepanto Consolidated Mining Co. (LC) has outstanding capital stock of 51.336 billion shares, divided into 30.805 billion Lepanto A shares and 20.53 billion Lepanto B shares. The owners of the company’s outstanding common shares will gather for an annual meeting at 4:00 p.m. on April 16, 2018.

    The mining company identified in a preliminary information statement (PIS) F. Yap Securities Inc. as principal stockholder, with 9.538 billion A common shares and 10.689 billion B common shares. First Metro Investment Corp. holds 2.72 billion A common shares and 799.642 million B shares. Philex Mining Corp. owns two blocks of A common shares – 2.164 billion A common shares and 3.495 million common shares.

    Felipe U. Yap, 81 years old, is the incumbent chairman of Lepanto’s nine-person board.

    He and the other incumbent directors have been nominated for re-election. To be re-elected with him are Bryan U. Yap, Cresencio C. Yap, Regis V. Puno, Marilyn V. Aquino, Douglas J. Kerwin and Ethelwoldo E. Fernandez. Also up for re-election are Lepanto’s two independent directors, namely, Ray C. Espinosa and Val Antonio B. Suarez, who are both lawyers.

    Lepanto explained the family relationship in the company. It said Bryan U. Yap, director and president, is the son of the chairman and chief executive officer, Felipe U. Yap; Cresencio C. Yap is a brother of the chairman, while Abigail Y. Yang is his niece.”

    Yang is vice president for technology and planning of Lepanto, and chief executive officer of Yapster e-Conglomerate Inc.

    Due Diligencer’s take

    The classification of common shares is intended to limit the holdings of foreigners to B shares. But Filipinos may also hold B shares, along with A shares.

    This could be the reason why, despite the suggestion a long time ago when the Securities and Exchange Commission was under the chairmanship of lawyer Perfecto R. Yasay Jr., Cebu Property and Lepanto still divide their common shares into A and B.

    Some other listed companies continue to use the two classes of shares in their capital stock. Perhaps, this is to limit foreigners’ ownership, which is set at 40 percent of outstanding, while Filipinos are in control of the majority holdings equivalent to 60 percent.

    Somehow, the use of the distinguishing feature of a capital stock would continue as long as the SEC does not discourage it. Of course, there is nothing wrong with A and B shares. The only question here is, why limit foreigners’ holdings to B shares when both classes could be combined?

    Besides, it would be easy for anyone among the public to notice if foreigners have been accumulating an excessive stake in the capital stock of a listed company. It is a very simple mathematical computation.

    For what could be a radical suggestion, why limit foreign ownership when this country needs more investments that foreigners could provide? Just asking.



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