Public investors deserve proper disclosures
Emeterio Sd. Perez
BEING listed means a company lists either its entire outstanding capital stock or only few or some of its common shares for trading thru the facilities of the Philippine Stock Exchange (PSE). Said listing of either common or preferred, doesn’t make a company public.
This is a reality that public investors, who trade on listed shares, have to contend with. No one among the majority stockholders, who are usually the families who, over the years, nurtured the growth of these businesses, would unload their holdings to the point of losing their majority ownership to others.
This is why it’s ironic when non-family members are credited with majority holdings in public ownership reports (POR). As public investors, it’s not fair to portray them as controlling or majority owners. What the best listed companies could have done is to give the public their due seats on the board of directors.
Due Diligencer has long been batting for the public investors’ representation in the boards of listed companies.
Although it failed in this advocacy, at least it has tried its best to make the public aware of their role as investors. It would have been better if their majority ownership translates this to at least a directorship.
Being the practice now, the majority owners even appoint independent directors (IDs), who, in the first place, are not independent at all but are beholden to the owners. If they, as members of the board, would dare contradict the wish or wishes of the owners, they could bid their directorship goodbye.
As nominees of the owners, IDs must toe the line and follow what they are told to do. Should they instead fight for the right of the public, they would certainly lose their board seats in the next election if not immediately.
Government-control
In the Philippines, public companies, as far as Due Diligencer’s reading of various postings on PSE website is concerned, don’t exist. The term “public” applies only to entities, which the government either wholly own or control. As ventilated in a column about Philippine National Construction Corp. (PNCC), the government controls the company’s ownership thru the holdings of The Republic of the Philippines and the Government Service Insurance System.
As a matter of fact, despite PNCC’s control by the government, the construction company remains listed even if only a few of its common shares are actively traded. If only the Securities and Exchange Commission (SEC) and PSE would make a proper disclosure of the turnover of PNCC common shares, the public would know who trade on the company’s listed common shares.
Are insiders engaged in trading PNCC common shares? The question or questions about PNCC and other listed companies would linger on as long as information on the changes in “Statement of Changes in Beneficial ownership” remains confined to “acquisition”? It would have been more informative to the public if the disclosure or disclosures also cover the sellers and buyers.
Due Diligencer’s take
Last Monday’s piece about Centro Escolar University (CEU) was too long to accommodate Due Diligencer’s take as a regular feature. The omission isn’t intentional.
Due Diligencer could have explained what CEU lacks in its corporate name or corporate identity. Is it a stock corporation? If it is, why doesn’t it use either “Incorporated” or “Corporation” as part of its corporate name?
Of course, requiring listed companies to use either “Incorporated” or Corporation” may not be compulsory.
However, if others, like International Container Terminal Services Inc. (ICTSI) and Ayala Corporation (AC) make use of either, why can’t CEU do the same?
No. Any change would not make CEU different from the rest of the schools and universities whose common shares are listed. FEU, for example, uses three letters that stand for Far Eastern University. As a listed company, it uses Far Eastern University, Inc. as corporate name.
The absence of either Inc. or Corp. in CEU’s corporate name may be insignificant as far as the public investors are concerned. However, to SEC officials, a company is either a stock corporation or a partnership.
By the way, listed companies should be required to explain the entries in their financial filings. What for is the amount of retained earnings if this is shown as part of a consolidated PSE posting, when the public investors would have been more interested in knowing how much they expect in terms of dividends from their choice stocks? Just asking.
esdperez@gmail.com
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