PLDT welcomes SEC’s foreign ownership draft rules

MANILA, Philippines – Philippine Long Distance Telephone Co. (PLDT), the company involved in a legal saga on foreign ownership limits, welcomed certain provisions of the Securities Exchange Commission’s (SEC) draft rules on the issue.

In a statement on Wednesday, April 3, PLDT Group Regulatory Affairs and Policy Head Ray Espinosa lauded the draft rule’s  two-tiered test meant to curb the use of dummies in corporate structure.

According to the draft rule, the required 60% Filipino ownership shall be applied to both “(a) the total number of outstanding shares of stock entitled to vote in the election of directors; and (b) the total outstanding stock, whether or not entitled to vote in the election of directors.”

“This test, in our view, is consistent with the relevant provisions of the Philippine Constitution and other existing laws. Hopefully, the latest draft guidelines when promulgated by the SEC will provide a more conducive and enduring atmosphere for foreign investments in the Philippines,” Espinosa said. 

Espinosa added that the country is ripe for more foreign direct investments due to the new rules and the recent investment grade upgrade from Fitch Ratings.

“The timing for the promulgation of these guidelines is very important given the recently bestowed investment grade status of the Philippines. The confluence of these two important milestones (and other relevant factors as well) will pave the way for increased foreign direct investments in the Philippines which are crucial for sustainable inclusive economic growth,” he said.

PLDT had benefited from the Philippines’ upgrade. Fitch upgraded PLDT’s rating to BBB, a notch higher than the sovereign’s.

Foreign ownership case

PLDT, the country’s largest telecommunications firm, lost a Supreme Court ruling in a foreign ownership case on October 2012. The company issued 150 million voting preferred shares to cut the total voting shares of foreign groups to 34.5%. The law mandates a 60%-40% split in favor of Filipinos for the ownership of local companies.

The company’s foreign ownership case was the basis for the SEC’s new draft rules. The new guidelines complied with the Supreme Court ruling, which determined that the term “capital” in Section 11 of Article XII of the 1987 Constitution only pertained to common shares or shares with voting rights.

The new draft is the second version of the guidelines for foreign ownership. The earlier version maintained a 40% cap on foreign ownership to each class of company shares, whether common, preferred, preferred voting or any other class.

The SEC has posted the revised rules on its website and is asking the public submit comments and suggestions. The agency said that it would accept comments until April 25. – Rappler.com