By Neil Jerome
C. Morales (The Philippine Star) | Updated May 21, 2013 - 12:00am
MANILA,
Philippines - The Securities and Exchange Commission (SEC) has finalized the
foreign ownership cap rules for Philippine companies.
In a
memorandum issued yesterday, the SEC en banc said it will no longer implement
the hotly-contested 40-percent foreign ownership cap for each class of shares.
“The required
percentage of Filipino ownership shall be applied to both the total number of
outstanding shares of stock entitled to vote in the election of directors, and
the total number of outstanding shares of stock, whether or not entitled to
vote in the election of directors,” SEC said.
“All covered
corporations, shall at all times, observe the constitutional or statutory
ownership requirement,” SEC added.
Erring firms
will be given one year to comply with the foreign ownership limit.
In March, SEC
sought public comments for the second and final draft that outlines the rules
on the ownership of local firms.
Under the
SEC’s first draft released in November, all covered corporations like utility
firms are required to meet the constitutional requirements of 40 percent
foreign ownership limit for each class of shares at all times.
This followed
the Supreme Court’s ruling last October stating that “the 60-40 ownership
requirement in favor of Filipino citizens must apply separately to each class
of shares, whether common, preferred non-voting, preferred voting or any other
class of shares.”
But in an
entry of judgment the SEC received on Jan. 8, the Supreme Court directed the
SEC to apply the definition that the term capital “refers only to shares of
stock entitled to vote in the election of directors, and thus in the present
case only to common shares., and not the total outstanding capital stock
(common and non-voting preferred shares).”
The
Philippine Stock Exchange earlier said the implementation of the foreign
ownership cap on each class of shares will dampen the attractiveness of the
Philippines to foreign capital and hold back the development of capital
markets.
The foreign
ownership issue stemmed from the June 2011 decision of the Supreme Court, which
granted part of the petition of lawyer Wilson P. Gamboa, who in 2007 sought to
void the sale of the state’s 46 percent stake in Philippine Telecommunications
Investment Corp. -- representing a 6.4-percent interest in PLDT -- to Hong
Kong-based First Pacific Co. Ltd.
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