PHC defiance tests SEC resolve

Philcomsat Holdings Corp. (PHC), which has been ordered to convene a stockholders’ meeting not later than April 17, will test the determination and resolve of the Securities and Exchange Commission (SEC) to exercise its supervisory powers, especially over publicly listed companies like PHC.

The PHC case is also a test on whether the SEC, in accordance with its charter, can really protect minority stockholders.

Observers said that if the SEC order is not implemented, its mandate as the government’s corporate watchdog would be undermined.

In fact, observers pointed out, the PHC board and management headed by Benito Araneta as chairman and his uncle Manuel Nieto Jr. as president, is already undermining the SEC’s mandate by disregarding its order. To add insult to injury, PHC told the commission it would convene a special stockholders’ meeting a day after the SEC deadline and for a purpose different from the SEC directive.

Minority stockholders of the company have denounced the Nieto group’s move. "I firmly believe that such act of PHC reveals its intention to keep its current management in power and render inutile the laws that protect the minority stockholders," PHC stockholder Jose Ma. Ozamiz said in a letter to the SEC en banc.

Ozamiz asked the commission to cite the directors and officers of PHC in contempt and to authorize him to call and convene a stockholders’ meeting in their stead.

The commission, in response to complaints by Ozamiz, Victor Africa and Philippine Communications Satellite Corp. (which owns 81 percent of PHC), ordered the Nieto group to convene a PHC stockholders’ meeting not later than April 17 this year.

The holding firm did not have a stockholders’ meeting in May 2005, in violation of its by-laws and the provisions of the Corporation Code.

In an apparent attempt to circumvent the SEC order, the Nieto group filed with the SEC a preliminary statement proposing to call a special stockholders’ meeting on April 18, 2006 only for the purpose of amending the company’s articles of incorporation.

Ozamiz pointed out that the Nieto group’s proposal violates the SEC order for the calling of an annual stockholders’ meeting and sets a date beyond the deadline prescribed by the regulatory body.