Court stops SEC on PSE election issue

Manila, Philippines - The Pasig Regional Trial Court has issued an injunction preventing the Securities and Exchange Commission from imposing the 20 percent ownership limitation in the Philippine Stock Exchange.

The injunction was in response to a petition filed by the PSE against the SEC decision limiting brokers’ voting rights to 20 percent.

The injunction likewise covered the SEC order, mandating that “only non-brokers shall be eligible to vote for the broker candidates running for open seats or those seats that can be occupied by either a broker or a non-broker.”

This means that even broker-shareholders cannot vote for broker candidates who can occupy three of the 15 PSE board seats.

The PSE maintained that these directives curtail the rights of brokers beyond the requirements of the law. Brokers currently hold a 32.76 percent stake in the bourse.

When asked to comment on the case filed anew by the PSE, SEC commissioner Juanita Cueto said: “There is a new case filed by PASBDI with the RTC. Same judge, same issues.”

The case was filed as the PSE’s annual board elections scheduled on May 16 nears.

Last year, the PASBDI appealed its case on the 20 percent voting limitation to the Pasig Regional Trial Court, which in turn granted PASBDI a temporary restraining order. The SEC, however, elevated the case to the Court of Appeals where it is currently pending.

Under the Securities Regulation Code, no single industry should own more than 20 percent of the exchange’s total outstanding capital stock. Individual investors, on the other hand, are limited to a maximum of five percent stake each in the PSE.    

Of the 15 board seats, three are allocated to broker-directors, eight to non-broker directors – one of whom will be president, three to independent director slots and four who will represent the interests of issuers, investors and other market participants – and four are open seats.

Brokers used to own over 90 percent of the outstanding shares of the PSE before it was demutualized in 2001. The demutualization was prompted by the enactment of the Revised Securities Regulation Code.