• Who will police PSE as a listed company?


    THE website of the Philippine Stock Exchange (PSE) shows the following data about itself: It has 73,430,409 issued shares which are all listed, of which 73,330,397 are outstanding. It claims to have a free float of 89.61 percent. In a public ownership report as of June 30, 2014, which was signed by Joel S. Cruz and Walter R. Briones, operations officer and operations manager, respectively, PSE listed San Miguel Corporation Retirement Fund (SMCRF) as the principal stockholder, owning 7,555,200 shares or 10.3 percent of outstanding shares

    Insiders hold a total of 52,008 PSE shares—which PSE classifies as non-public—of which 8,245 shares are owned by 15 directors and 43,754 shares by 12 members of the management team. Together with SMCRF’s 7,555,200 shares, PSE has a total of 7,615,453 non-public shares, making the public the controlling or majority stockholders with 65,714,937 shares or 89.61 percent of the total.

    As principal stockholder, SMCRF naturally topped the list of PSE’s top 100 stockholders as of June 30, 2014. PSE’s list of top 100 stockholders showed SMCRF owning the same number of PSE shares that appeared in the exchange’s public ownership report as of June 30, 2014. Listed next to SMCRF are four other top corporate stockholders, namely: The First Resources Management & Securities Corp. with 7,137,099 shares or 9.73 percent; Banco de Oro’s Trust Banking Group and the Government Service Insurance System with 6,673,200 shares or 9.10 percent each; and Lucky Securities Inc. with 3,709,064 shares or 5.06 percent.

    Note that SMCRF was listed as owning the same number of shares in these two ownership filings, which is the only proper way of disclosing its holdings.

    Incidentally, the public may have been puzzled by two earlier but similar ownership filings dated December 31, 2013. While SMCRF was listed as owner of only 6.296 million PSE shares or 8.586 percent in the public ownership report, it was credited with 7,555,200 shares, or 10.30 percent, in the list of top 100 stockholders. Both postings were dated “as of 31 December 2013.”

    Perhaps Hans B. Sicat, PSE president, may have a ready explanation for the discrepancy between the two ownership disclosures of the same date. But this piece is not only about the discrepancy but also about the classification of SMCRF as the sole principal stockholder in the exchange’s ownership filings when, in fact, PSE had more corporate owners. If the public really controlled 89.61 percent of PSE’s voting shares as of June 30, 2014, and controlled 91.36 percent as of December 31, 2013, will someone identify for those who trade the listed stocks who represent them on the board?

    Has the Securities and Exchange Commission noticed the errors or conflicting numbers in PSE’s ownership reports? If not, then will Mr. Vicente Graciano-Felizmenio, director of SEC’s market securities regulation department, review the two filings for the sake of the investing public?

    Due Diligencer decided to look into PSE’s own filings posted on its own website to see how well PSE, as a listed company. has been complying with its own full-disclosure rule. As it turns out, with the conflicting ownership reports, the exchange’s management may not have been fully compliant with the market’s transparency policy when SMCRF was credited with ownership of 6.296 million PSE shares or 8.58579833 percent in a public ownership report, and with 7,555,200 PSE shares or 10.30 percent in the list of top 100 stockholders, “as of 31 December 2013.”

    In disciplining listed companies, PSE, being a self-regulatory organization, has the power to go after the violators of its rules, particularly those pertaining to transparency. But when it is THE violator, who will discipline Sicat and company? In short, who will police the police?

    Don’t tell the public that it is up to SEC Chairperson Teresita Herbosa and the four other members of the commission to decide how to deal with the exchange’s failure to follow its own rules and those of the SEC. Market investors should be fully informed about what’s taking place inside the PSE boardroom.

    By the way, will Aissa V. Encarnacion, PSE corporate information officer, disclose the various funding options of the exchange in paying for its acquisition of the shares held by the Bankers Association of the Philippines in PDS Holdings Inc.? Will she also compute “28.9 percent of P2.25 billion” and properly disclose the result so that public could at least make a guess how much PSE is going to spend for its new investment? Why not let the investors know whether or not PSE’s unappropriated retained earnings of P973.648 million as of June 30, 2014 would be enough to pay BAP for its PDS shares?



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