Boycott forces postponement of PSE elections

Controversy again marred yesterday’s scheduled annual elections at the Philippine Stock Exchange (PSE) as a boycott called by the group opposed to the administration of chairperson Vivian Yuchengco forced the postponement of the membership meeting for lack of quorum.

Claiming "moral victory" on the support of the majority of the broker-members, the group led by stockbroker-businessman Robert Coyiuto Jr. and Filomeno Francisco cheered as it was announced that the meeting and elections would not push through since the required quorum could not be met even after a five-hour wait.

"The majority agreed in our position that our rights as stockholders should be preserved," said Francisco, who leads an eight-man team of brokers running for seven seats in the 15-man PSE board of directors.

Last Thursday, the entire group along with four non-broker candidates formally withdrew their candidacies "in protest to what is a clear and brazen attempt by the incumbent administration to perpetuate its control of the PSE."

The Coyiuto-backed bloc has vehemently expressed their objection to the way the nomination and election process was been allegedly being dicated by the ruling Yuchengco camp, with the blessing of the Securities and Exchange Commission (SEC).

The bone of contention was the shortlisting of the independent directors, as they argued that all directors – brokers and non-brokers – should be directly elected by the shareholders and not appointed, in this case by the PSE’s Nominations and Elections Committee (Nomelec) chaired by Director Jose Aquino, of the SEC’s Market Regulations Department.

The Nomelec and the PSE board, however, defended the shortlisting process which they said was in compliance with SEC Memorandum Circular 16 issued in November last year which provides the basis for the selection of independent directors in corporations, including the demutualized PSE, in accordance with the Code of Corporate Governance.

"It’s sad that they (the Coyiuto group) have to do that," Yuchengco said. "I guess it has become a personal fight over power, it’s very obstructionist."

Despite the boycott, the brokers – including the opposition – loitered around the PSE premises as early as 7 a.m. mainly to watch and observe the proceedings, with the two contending camps accusing each other of harassing and intimidating the members to either show up or not.

At 11 a.m., Yuchengco called for an adjourment of the meeting due to the lack of quorum and reset the event to Friday, April 11, at 3 p.m. In order to to convene a membership meeting, there must be at least 50 percent plus one of the total number of issued shares registered, which is equivalent to about 4.6 million shares.

Yesterday, the registered number of voting shares reached only about 4.3 million, which means 3000,000 shares were still needed to come from at least six members. When the PSE was demutualized in 2001, all 184 brokers at that time were each alloted 50,000 shares which they can register in part or in full during PSE meetings.

"I think it’s very juvenile of them to do that, it shows you what kind of brokers they are. I don’t think it’s a "moral victory" for them because how can they claim that when they are damaging the PSE as an institution," Yuchengco stressed.

But the Coyiuto camp said the lack of quorum only showed that the majority of the members are disgusted over how things are being run at the Exchange, pointing out that their self-regulatory organization (SRO) status has not served its purpose due to the constant influence and control of the SEC.

Veteran stockbroker and former PSE governor Irving Ackerman said it bluntly: "I think it’s time to return this business back to the brokers."

In fact, four candidates associated with the Coyiuto-Francisco group lodged a court suit last week contesting the merits of SEC Circular 16, in particular the shortlisting of the four independent directors. In their petition, the four (Francisco and former PSE chairman Harry Liu and non-brokers Bienvenido Laguesma, a former labor secretary and law professor Cristine Cuisia-Remollo) are seeking a temporary restraining order (TRO) on the implementation of SEC circular.

The case, however, is still to be raffled off on Tuesday, at Branch 158 of the Pasig Regional Trial Court. "If there’s no TRO, there should be a new board on Friday," Yuchengco confidently said.

Still, Yuchengco noted that one issue that has yet to be resolved is whether there would be a re-registration on Friday or just a carry-over system wherein all previously registered shares are automatically logged in, leaving just the crucial quorum-filling votes for new registration.

"If we have to bodily carry them over, then we will," she stressed.

Had the elections pushed through yesterday, the entire slate led by Alicia Arroyo, a Yuchengco ally, would have easily clinched victory since their opponents have all withdrawn.

Last year, the PSE elections went the controversial route when Yuchengco snatched the chairmanship from Coyiuto on the strength of the votes by the majority non-broker directors led by PSE president Ernest Leung. This was despite Coyiuto’s team winning five of the seven slots reserved for brokers, an indication, Coyiuto said, that their group has the overwhelming support of the members – the bona fide owners of the Exchange.

Coyiuto and Yuchengco have been at odds with each other since the days of the defunct Manila and Makati Stock Exchanges.