SEC ruling on foreign ownership out by March

by VG Cabuag, BusinessMirror

Posted at Jan 11 2013 07:33 AM | Updated as of Jan 11 2013 03:33 PM

MANILA, Philippines - The Securities and Exchange Commission (SEC) may release its ruling on the foreign-ownership rule by March or April this year, but agency officials hinted that its ruling will not be controversial and will be "easy to implement."

SEC Chairman Teresita Herbosa told reporters on Thursday the agency will collate all the inputs that it got from the industry and come up with its own decision, which would be based on a Supreme Court (SC) ruling issued last year.

She said the SEC will hold a series of public hearings before the new ruling comes out and will implement the guidelines by middle of the year.

In an entry of judgment from the SC, the term “capital,” based on the 1987 Constitution, refers only to shares of stock entitled to vote in the election of directors. Thus, in the present case, the term refers only to common shares, not to the total outstanding capital stock or common and non-voting preferred shares, it said.

The SEC “is directed to apply this definition of the term ‘capital’ in determining the extent of the allowable foreign ownership in respondent Philippine Long Distance Telephone Co.,” according to the High Court document.

“We do not want to have a rule that is difficult to implement. Our ruling will not lead to conflict or further controversy,” Herbosa said in a briefing.

She added that they are working to have an ownership rule that would no longer give rise to further legal challenge in court.

The issue stemmed from a case filed against PLDT, which was accused of breaching the foreign-ownership rule.

PLDT is a major unit of First Pacific, led by its managing director and chief executive officer, Manuel V. Pangilinan, and controlled by the Salim family of Indonesia.

A minority owner of PLDT warned that it might pull out its funds in the country if the government changes its foreign-ownership rule.

Lazard Asset Management said the limit on foreign ownership should continue to be calculated as a percentage of total shares outstanding as against the proposal of segregating it according to share class.

“We would like to continue to own shares on behalf of our clients, but may be forced to sell our holding if the regulation changes,” the US-based company, signed by Portfolio Manager Rahit Chopra and analyst Elizabeth Chung, said in their letter dated December 11, 2012.