MANILA, Philippines - The Philippine Stock Exchange on Friday said the Securities and Exchange Commission's new rules on foreign ownership could affect as much as 13% of the listed companies.
"This is not an issue about one company, this is a market-changing event. One of the hallmarks of stable economies are the consistency of rules and the application of such over time [but] our country's economic history has been peppered with policy reversals, about-faces and too many moving variables," PSE President Hans Sicat said during SEC's public dialogue on the new rules on foreign ownership.
"The last two years have seen an improvement in the country's economic and governance structure. This development (the new rules) comes at such a critical juncture that it threatens to reverse a lot of the gains we had made as a nation," Sicat continued.
SEC on Monday released a draft memorandum circular, reflecting a Supreme Court decision in October which defines the 60% Filipino ownership requirement for public utilities must apply separately to each class of shares.
The public dialogue is being done to finetune the details of the new measure before the SEC finalizes the circular.
SEC Chair Teresita Herbosa said during the dialogue that the new rules are being proposed not just because of the Supreme Court ruling but to reflect "the spirit of the constitution."
The foreign equity issue stemmed from a court case filed by a Wilson Gamboa, a Philippine Long Distance Telephone Co. shareholder who asked the High Court to nullify the government's sale of PLDT shares to Hong Kong's First Pacific Company Ltd.
This gave birth to PLDT's foreign equity problem after the Supreme Court in June last year ruled that Filipinos must own 60% of the firm's common shares as opposed to measuring Filipino ownership against total outstanding capital stock which includes preferred shares with no voting powers.
PLDT Head for Regulatory and Policy Affairs Ray Espinosa said in the same dialogue the proposed rules could hurt financial markets and the economy.
"At a time that we're trying to achieve investment grade status in terms of credit ratings, i would think this application of the [Supreme Court ruling] and an expansive rule on restriction on foreign ownership to actually be a force that would counter all of the efforts of our present government to achieve higher credit ratings," Espinosa said.
Herbosa said the SEC will wait for position papers on the proposed memorandum circular "hopefully" by Christmas. -- from a report by Coco Alcuaz, ANC