Will the SEC fight for public investors?

Emeterio Sd. Perez

GLOBE Telecom Inc. (GLO) reported, as seen on the Philippine Stock Exchange (PSE) website, that the number of its outstanding common shares have increased to 133.046 million as of June 4, 2018, from 132.917 million.

This means an addition of 129,250 common shares, based on a company filing dated April 11, 2018.

The company’s outstanding capital stock also includes 158.515 million outstanding voting preferred shares and 20 million non-voting preferred shares.

Of its outstanding capital stock, the public float of 21.68 percent and foreign ownership of 25.36 percent did not change, Globe Telecom said. This could mean only insiders enjoyed ownership of the additional common shares.

The filing was “filed on behalf” of the company by Solomon Hermosura, general counsel, compliance officer and corporate secretary.

In the same disclosure, Globe Telecom said the additional 56,350 GLO common shares resulted from the “subscription of 11 grantees under our stocks grant plan,” who, it said, “are key officers” who subscribed at P1,738.30 per common share.

Globe Telecom allocated a total of 129,250 common shares under a long-term investment plan. It explained that “the LTIP 2015-2017 is a stock grant plan that is exercisable after three years and has no expiration date, with stock price and guidelines subject to the terms and conditions of Globe LTIP.”

Globe’s common shares were last traded at P1,605 on June 4, 2018. The stock opened trading at P1,598, hit a high of P1,605, but dropped to a low of P1,561.

Ownership profile

BDO Unibank Inc. has authorized capital stock of 6.5 billion shares, divided into 5.5 billion common shares and 1 billion preferred shares. Both classes of shares have a par value of P10 each. Of the total, 4.885 billion shares are subscribed and paid up.

In an amended general information sheet (GIS), the bank said 12,259 Filipinos owned, as of April 2018, a total of 3.536 billion BDO shares, or 72.39 percent. Their holdings were divided into 3.021 billion common shares, while only two held 515 million preferred shares. On the other hand, 347 foreigners were limited to owning 1.349 BDO common shares, or 27.61 percent.

At P10 per share, BDO’s 4.885 billion outstanding capital stock totaled P48.85 billion.

BDO Unibank’s GIS listed among its stockholders SM Investments Corp. (SMIC), with 1.751 billion common shares, or 35.85 percent; HSBC Ltd., which holds for clients 802.5 million common shares, or 16.43 percent; Deutsche Bank Manila, for clients’ accounts, 355.737 million common shares, or 7.28 percent; and Citibank N.A., 240.631 million common shares, or 4.93 percent.

Aside from SMIC, the bank’s corporate stockholders also include Multi-Realty Development Corp., 291.513 million common shares, or 5.97 percent, and Sybase Equity Investments Corp., 240.01 million common shares, or 4.91 percent.

Sybase Equity and SMIC also hold 391.4 million preferred shares and 123.6 million preferred shares, respectively.

Sybase, SMIC, Shoemart and Multi-Realty are among the companies owned by businessman Henry Sy Sr. and his family.

BDO’s public stockholders

Six principal stockholders were reported in a public ownership report as owners of 2.382 billion common shares, or 54.52 percent of 4.369 billion outstanding BDO common shares as of March 31, 2018.

Minus their ownership and insiders’ holdings, BDO Unibank credited public stockholders with 1.965 billion common shares, or 44.98 percent.

Do the public stockholders really own the holdings attributed to them? If they do, they should have been allowed to elect nominees to represent their 44.98 percent, or five seats on an eleven-member board.

Of course, public stockholders don’t enjoy these seats at all. As Due Diligencer has been writing in this space, instead of the public, BDO Unibank and other listed companies elect independent directors to represent them, but who may not qualify at all to get voted as regular directors.

The truth is, Sy Sr., the patriarch, is the 12th member of BDO Unibank’s 11-person board. Being chairman emeritus, perhaps, the title is in recognition of his business acumen as the founder of the SM group of companies.

Incidentally, BDO Unibank’s POR does not include the Sy family patriarch, who is, however, listed on the PSE website as chairman emeritus. Teresita Sy-Coson is the chairperson of the bank.

Due Diligencer’s take

It is up to the Securities and Exchange Commission (SEC) to do its own computation of the ownership of voting shares in listed companies. By doing so, its officials would be doing the public a service by informing those who trade on listed stocks if they—the public—are, indeed, the significant stockholders that they are portrayed to be in PORs.

Besides, if SEC officials are not beholden to anyone, they would scrutinize every move of the boards of more than 300 listed companies and inform the public of their findings. Isn’t it more worthwhile to efficiently monitor listed companies and find out if they are all compliant with the 10 percent minimum public ownership rule?

In fact, SEC officials, led by the five-person commission headed by Chairperson Teresita Herbosa, would do a greater service to the public investors if they would ask the owners of listed companies: How come you attribute to the public as much as 44 percent ownership but don’t allow them to elect even one representative to the board?

By the way, the public should also be recognized for its role in the listing of both common and preferred shares.

Designating one public stockholder as director of a listed company would be a good start. This is not taking away from management or owners any of their initiatives to expand the reach of their businesses.

Why are business owners afraid of anyone among the public getting a glimpse of what their boards are doing? Just asking.


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