• Why SMIC is listed but not public



    SM Investments Corp. (SMIC) will hold its annual stockholders’ meeting at 2:30 p.m. on April 27 at the Forbes Ballroom 1 & 2, Conrad Manila, Seaside Boulevard, Mall of Asia Complex, Pasay City.

    For the guidance of its stockholders, the flagship holding company of businessman Henry Sy Sr. and his family posted on the website of the Philippine Stock Exchange (PSE) its preliminary information statement.

    As shown in said filing, SMIC has authorized capital stock (ACS) of 1.19 billion common shares, with par value of P10, of which 803 million, or 67 percent, is outstanding.
    On Feb. 29, SMIC (market symbol SM) opened trading at P840.50, down from P830 on Friday, and closed at P820, down from P845.At P845 per share, SMIC has total market capitalization of P678.6 billion.

    Billionaire children

    The five children of businessman Henry Sy, Sr. own 352.7 million SMIC common shares, or 43.9 percent. Their holdings are listed separately because they hold five percent or more of SMIC’s outstanding common shares. At P845 per share, which was SM’s trading high on Feb. 29, their paper wealth amounts to P298 billion.

    Individually computed at P845 per share, Teresita T. Sy’s 57 million common shares, or 7.11 percent, had market value of P48.2 billion; Harley, 58.5 million common shares, or 7.29 percent, P49.4 billion; Henry Jr., 58.46 million common shares, or 7.28 percent, P49.4 billion; Hans, 65.97 million common shares, or 8.21 percent, P55.7 billion; Herbert, 65.96 million common shares, or 8.21 percent, P55.7 billion; and Elizabeth, 46.7 million common shares, or 5.82 percent, P39.5 billion.

    Including the SMIC common shares owned by the other Sys and the holdings of Sy-owned companies totaling 102.2 million SMIC common shares, the family controls 454.9 million SMIC common shares, or 56.6 percent.

    Less for Filipino public

    In a public ownership report (POR) as of Dec. 31, 2015, SMIC listed four Sys as holders of 204.4 million common shares, or 25.45 percent, while crediting five affiliates/related parties with 50.66 million common shares, or 6.30 percent. These totaled 255 million SMIC common shares, or 31.76 percent.

    The same POR left blank the space for “lock-up” shares but came out with a “total” of 432.3 million SMIC shares, or 53.83 percent. By deducting 255 million SMIC common shares from 432.3 million “total”, the number of lock-up shares would total 177.26 million, or 22 percent.

    This ownership profile, according to the company’s POR, makes SMIC more public than others because its public stockholders hold 370.75 million common shares, or 46.17 percent.

    As shown in the POR, 268.7 million SMIC common shares, or 72.7 percent of publicly owned 370.7 million shares, are owned by foreigners, leaving the Filipino public with 102 million SMIC common shares, or 27.27 percent.

    As of Dec. 31, 2015, PCD Nominee Corp. topped SMIC’s list of 100 stockholders. It held 268.6 million common shares, or 33.4 percent for non-Filipinos and 89.2 million, or 11.1 percent, for Filipinos.

    8-person board

    The board of SMIC, like those of many other listed companies, does not reflect public ownership. Sy Sr., the 91-year-old patriarch, is chairman of the eight-person board; Teresita and Sy Jr., vice chairpersons; Harley, director and president. Jose T. Sio, a long-time SM insider, is executive vice president and chief finance officer.

    Sio is also non-executive director of China Banking Corp., Belle Corp., BDO Unibank and Premium Leisure Corp. of the SM Group. He is a director of Atlas Consolidated Mining and Development Corp., representing SMIC which owns 612.2 million Atlas shares, or 29.33 percent.

    SMIC has three other outsiders on the board, aside from Sio, but as independent directors.
    They are Vicente S. Perez Jr., Ah Doo Lim, and Joseph R. Higdon. Of the three, only Perez is Filipino while Lim is a Singaporean and Higdon is an American.

    As independent directors, Perez holds 144 SMIC common shares while Ah Doo Lim and Higdon own 125 SMIC common shares each.

    A nominee could get elected to SMIC’s board if he or she owns 160.6 million common shares, or 20 percent. At P845 per share, his or her holdings would have made him or her very rich with paper wealth of P135.7 billion.

    If the public really own 370.75 million SMIC common shares, or 46.17 percent, they would have been entitled to about 3.7 seats on an eight-person board. Instead, the Sys, as majority stockholders, appoint three independent directors, who may not be independent at all.



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