MANILA - ABS-CBN Holdings Corp's Philippine Depositary Receipts (PDRs) do not violate the constitutional restriction on 100-percent Philippine mass media ownership since no foreign investor has convert his or her PDRs into shares in ABS-CBN Broadcasting Corp, ABS-CBN officials said Thursday.
Albay 1st District Rep. Edcel Lagman quizzed ABS-CBN Holdings Corp and ABS-CBN Broadcasting Corp representatives on PDRs during a joint House hearing on the network's franchise renewal.
Asked by Lagman whether or not a foreign PDR investor has converted his or her PDRs into shares in ABS-CBN Broadcasting Corp, ABS-CBN Holdings compliance officer Enrique Quiason said no.
“You are assuring the joint committee under oath that this has never happened: that no PDR has been converted to shares of stock of ABS-CBN Corp in the name of a foreigner?” Lagman asked.
"In other words, the issuance of a PDR to a foreign investors does not dilute the 100-percent Filipino ownership and management of ABS-CBN Corp?" he added.
"Wala po. Hindi ho papayagan (There is none. That won't be allowed)," Quiason said.
ABS-CBN legal counsel Cynthia Del Castillo earlier clarified that PDR holders were "passive investors" who have no right to own, manage and vote directors in the broadcasting company.
The PDR holders only deal with ABS-CBN Holdings Corp, which in turn, holds the shares in the broadcasting company, she said. ABS-CBN Holdings Corp and ABS-CBN Broadcasting Corp are two separate firms, she added.
Lagman also mentioned that the issuance of similar financial instruments called American Depository Receipts has been an "appropriate practice" in the United States. Europe also has its own version, he said.
A PDR is also different to shares; it's more of a pledge and a contractual obligation between the holding company and the investor. Ownership of shares remains with the holding company, Del Castillo said.
"There is no assignment of shares that they place in this structure, because the ownership remains with ABS-CBN Holdings," she said.
Solicitor General Jose Calida, in his Supreme Court petition against the network, said ABS-CBN violated the constitutional provision of 100-percent Filipino ownership of mass media firms, citing its PDRs.
PDRs are also considered securities which were duly approved by the Securities and Exchange Commission (SEC), Del Castillo said.
The copies of the permits as well as sample PDRs were submitted to the joint committee.
The SEC, in a Senate committee inquiry on ABS-CBN's franchise, confirmed that ABS-CBN Holdings Corp's PDRs were approved at the time of issuance. Other companies in the Philippines also offer the same financial instrument.
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