The right of public stockholders to board seats

Credit to Author: EMETERIO SD. PEREZ| Date: Thu, 06 Dec 2018 16:20:13 +0000

Emeterio Sd. Perez

BDO Unibank Inc. has 4,373,799,144 outstanding common shares. It has listed 4,373,362,284 BDO common shares and issued 4,373,799,144 common shares, according to the website of the Philippine Stock Exchange (PSE). It claims free-float level of 45.01 percent, which would be equivalent to 1,968,646,995 BDO common shares.

A public ownership report (POR) filed by BDO on Oct. 16, 2018 also showed 45.01 percent of outstanding as publicly owned. This ownership made it appear that BDO’s public stockholders held more BDO common shares than the individual principal stockholders.

The same POR listed SM Investments Corp. with 1.751 billion BDO common shares, or 40.04 percent; Shoemart Inc., 90.024 million BDO common shares, or 2.06 percent; Multi-Realty Development Corp., 291.513 million BDO common shares, or 6.67 percent; Sysmart Corp., 9.856 million BDO common shares, or 0.23 percent; and Sybase Equity Investments Corp., 240.01 million BDO common shares, or 5.49 percent. BDO Securities Corp. held 100 BDO common shares.

Together, BDO’s six principal stockholders combined for ownership of 2.382 billion BDO common shares, or 54.49 percent. Their holdings topped by 9.48 percent the public stockholders’ 45.01 percent.

Tan-owned

PAL Holdings Inc. (PAL) has 11,610,248,994 issued common shares. Minus 25,015 treasury shares, its outstanding common shares total 11,610,223,979 common shares, according to a POR dated Dec. 4, 2018.

The company’s nine directors, led by business owner Lucio C. Tan, hold 3,150 PAL common shares.

Trustmark Holdings Corp., which also belongs to the group of companies that Tan and his family own, owns 10.034 billion PAL common shares, which are equivalent to 86.42 percent of 11.61 billion outstanding PAL common shares. Cosmic Holdings Corp., a PAL affiliate holds 378.207 million PAL common shares, or 3.26 percent.

By deducting the number of PAL common shares owned by Trustmark and those held by the board and Cosmic Holdings, the public stockholders are credited with 1.198 billion PAL common shares, or 10.32 percent of PAL Holdings’ 11.61 billion outstanding common shares.

PAL common shares were last traded on Dec. 3, 2018 at P8.28 each.

Sold

Vittorio Paulino P. Lim sold in six trades 14.95 million common shares in Asiabest Group International Inc. (ABG). He sold two million ABG common shares at P22.25 each on Nov. 15, 2018; 2.5 million ABG common shares on Nov. 20, 2018 at P19.52 each; 2.5 million ABG common shares at P19.84 each on Nov. 22, 2018; 2.5 million ABG common shares at P19.94 each on Nov. 23, 2018; three million ABG common shares at P19.82 each on Nov. 27, 2018; and 2.45 million ABG common shares at P19.98 each on Nov. 29, 2018.

The sales reduced Lim’s direct holdings to 85.051 million ABG common shares, or 28.35 percent.

Asiabest common shares opened the session on Dec. 4, 2018 at P21.70, peaked at P23.85, dropped to low of P21.50 and closed trading at P23.25.

Bought

Luis Miguel O. Aboitiz bought 2,529,085 common shares at P65.90 each in Union Bank of the Philippines (UBP) on Nov. 28, 2018. The acquisition increased the number of UBP common shares he owns to 5,503,230, or 0.45 percent. As an insider, he is a member of UBP’s 15-person board.

A POR listed Aboitiz Equity Ventures Inc. (AEV) as a direct holder of 591.173 million UBP common shares, or 48.57 percent of 1.217 billion outstanding UBP common shares. AEV also indirectly owns 6.56 million UBP common shares, or 0.79 percent, which the company said are lodged with PCD Nominee Corp.

The same POR also showed The Insular Life Assurance Co. as a significant stockholder with 198.274 million UBP common shares, or 16.29 percent. Together, AEV and Insular Life combined for ownership of 799.007 million UBP common shares, or 65.65 percent.

Union Bank attributed to its public stockholders 836.867 million UBP common shares, or 68.70 percent.

Due Diligencer’s take

Do public stockholders of Union Bank really control 836.867 million common shares, or 68.70 percent of outstanding? Their percentage of ownership should translate to majority ownership of the bank, but of course it doesn’t.

A few, if not many, of the companies, which listed their common and non-voting preferred shares on the PSE, attribute to their public stockholders majority ownership but do not allow their right to elect at least one to represent them in the board.

If the public will go by the rule, they could insist on their right to board seats going by the number of common shares that a number of listed companies attribute to them. This may be a misnomer but one cannot assume to be right based on presumption. If the public are the majority stockholders, then they should be given the right to vote based on the common shares credited to them in a POR.

The SEC should not tolerate the continued use of POR filings to deceive public stockholders. It may not be too late for regulatory authorities such as the five-person commission to impose discipline on listed companies by going over every PSE posting including PORs.

If the public are really the owners of such number of common shares which they buy through the PSE, they have the right to demand to elect their nominees to the board. Listed companies will definitely deny them this right.

Aren’t the public stockholders of listed companies also entitled to their right as common share owners? Just asking.

Email: esdperez@gmail.com

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