MANILA, Philippines - When his real estate firm was faced with listing hurdles in 2007, presidential aspirant Manuel Villar got what he wanted from the Philippine Stock Exchange (PSE) board members because he was prepared to hit them where they were vulnerable.
Upon entering the PSE boardroom in June 29, 2007, Villar reportedly immediately uttered how the board members who were also brokers were violating the legal limitation on their own shareholdings in the PSE. This was based on separate accounts of a well-placed industry source and Sen. Juan Ponce Enrile who held a presscon Thursday.
“His (Villar’s) opening line was, ‘Ano nangyayari dito? Di ba di nyo rin sinusunod ang broker-shareholder limits?’ (What’s happening here? You’re also violating the broker-shareholder limits allowed by law),” recalled the source who is intimately familiar with the goings on at the exchange.
Villar was pushing for the board to immediately act on a request of his listed firm, Vista Land & Lifescapes, to reverse an earlier decision to put on escrow some shares. (Read: The inside story of Villar's visit to PSE)
Brokers are required to only have 20% representation in the 15-man board of the PSE, which they used to wholly own. The Revised Securities Law imposed this limit after several major cases exposed the conflict-of-interest of brokers who also sit on the board of the PSE, which regulates their businesses.
At the time Villar paid them a surprise visit, the brokers had almost 40% representation in the PSE board. PSE has been regularly asking the corporate regulator, the Securities and Exchange Commission, which is overseeing the implementation of the securities law, for “exemptive relief.”
This exemption costs the exchange some P500 a day fine.
This provision of the securities law aims to eradicate the “Old Boys Club” that continues to plague capital market developments in the country. Investors in the local bourse who actively buy and sell shares are estimated to only reach 100,000. It pales in comparison to the robust investor base of our peer countries.
When the case of locked-up shares in Villar’s flagship firm, Vista Land & Lifescapes, was being discussed at the PSE board, most of the directors who were inclined to reject the real estate firm’s request were brokers.
Enrile said Villar’s remark about the shareholder limit violations of the brokers “assumed the character of a veiled threat to members of the PSE board.
“It caused the immediate approval of (his) request,” Enrile noted.
In the minutes of the June 29, 2007 special board meeting at the PSE, broker-directors Vivian Yuchengco and Omelita Tiangco wanted to put on record their reservations about their peers’ decision to favor Villar.
For his part, Eusebio Tanco was described to have “expressed his dismay that this situation happened.” He felt that “the board should not have been pressured to make a decision because of time constraints.”