PLDT issues preferred shares to meet foreign ownership limit

MANILA, Philippines – All it took was less than 10 minutes.

The ceremonial announcement during the special shareholders meeting of Philippine Long Distance Telephone Co. (PLDT) on Thursday, March 22 was almost uneventful. It was anything but.  

This short event allowed the phone giant to comply with a controversial Supreme Court (SC) ruling that rocked Corporate Philippines in 2011.

During the brief event, PLDT chair Manuel V. Pangilinan announced that majority of the shareholders — approximately 92.4% of those entitled to vote — agreed to issue new preferred shares with voting rights.

Limit in foreign ownership

The high court earlier directed the Securities and Exchange Commission (SEC) to investigate if PLDT violated the 60:40 foreign ownership rule. The Philippine Constitution bars foreigners from owning over 40% of a utility firm due to security reasons.

The newly issued 150 million preferred shares with voting rights on March 22 spares the SEC from probing whether the stakes of PLDT’s part owners — Hong Kong-based First Pacific Co, as well as JPMorgan Asset Holdings and Japanese firms NTT Docomo Inc. and NTT Communications — breached that limit by owning around 41%.  
The voting preferred shares will be issued to the Beneficial Trust Fund of PLDT and other Philippine nationals.
The new ownership ratio will be 65:35 in favor of Filipino investors.

Overwhelming support

In his brief address, PLDT chairman Manuel V. Pangilinan announced that “The attendance today in the meeting is approximately 92.4% of those entitled to vote. Ninety-even percent of the 92.4% voted in favor of the resolution. The rest, about  2% or 3%, either voted against it or abstained from voting.”
PLDT board member and head for regulatory and policy Ray Espinosa commented that “this goes to show the shareholders’ overwhelming support to approve the amendments” to the Seventh Article of the Articles of Incorporation, consisting of the sub-classification of the company’s preferred capital stock into 150,000,000 shares of voting preferred stock, each with a par value of P1, and 807,500,000 shares of non-voting serial preferred stock, each with a value of P10. –

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