SEC approves PLDT move on foreign ownership issue

MANILA, Philippines – One of 2011’s main corporate and legal issues may be resolved soon.

On Thursday, June 7, local giant Philippine Long Distance Telephone told the stock exchange that the Securities and Exchange Commission has approved its move to issue preferred shares with voting rights that reduces the stake of its foreign owners to 35%.

Getting the nod of the corporate regulator means the issue, which has already reached the Supreme Court, may be moot soon.

Back-up plan

Issuing the preferred shares last March 22 is PLDT’s back-up plan just in case the Supreme Court decided to rule against it.

In a June 2011 ruling, the high court directed the SEC to investigate if PLDT violated the 60:40 ownership rule. The Philippine Constitution bars foreigners from owning over 40% of a utility firm due to security reasons.

The High Court said SEC should define “capital” as ‘”shares of stock entitled to vote in the election of directors” or common shares, and not as total outstanding capital stock, which covers both common and non-voting preferred shares.

The voting rights attached to the 150 million preferred shares spare the SEC from probing whether the stakes of PLDT’s foreign 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. – Rappler.com