SC, SEC differ on what constitutes ownership

A difference in defining company ownership between the Securities and Exchange Commission (SEC) and the Supreme Court (SC) was bared yesterday as the culprit for the current trouble the Philippine Long Distance Telephone Co. (PLDT) is having on its shares structure that is being thought of violating the Constitution.

The SEC defines ownership based on all shares including non-voting stocks while a recent SC ruling maintained that ownership of a company should be counted strictly based on voting or common stocks.

The SEC, nonetheless, said it will wait for the SC’s final decision on whether PLDT has violated the 40 percent foreign ownership limit imposed by the Constitution on utility firms before it acts on a PLDT petition over the issue.

SEC commission secretary Gerard Lukban said there is a pending appeal by PLDT officers against the recent SC ruling that excluded preferred shares in the computation of foreign ownership in response to a statement issued by Sen. Joker Arroyo which said PLDT “operates in continuing violation of the Constitution” and must first correct its ownership structure if it has to continue its operations.

“The Senate cannot at present support any transaction of PLDT until it has corrected its ownership structure. To do so would be to countenance an unconstitutionality,” Arroyo said.

PLDT had said if preferred shares are counted as part of its capital, then foreign ownership accounts for just 13 percent to 14 percent of the company but, if only common shares are counted, PLDT said it will be 64 percent foreign-owned in violation of the 40 percent limit on foreign ownership. –Danessa O. Rivera, Daily Tribune