Foreign investors' voting power in PLDT to shrink to 36%

The board of directors of Philippine Long Distance Telephone Co. (PLDT) on Tuesday approved amendments to its articles of incorporation that in effect has reduced the voting power of its foreign shareholders to 36 percent. PLDT said in a statement and in a disclosure to the Philippine Stock Exchange that its board created a new class of preferred shares with voting rights. The new shares numbering 150 million will be limited to Filipino ownership. "When issued, the 150,000,000 Voting Preferred Shares will be about 45% of the expanded voting shares of PLDT and the total foreign equity in PLDT’s expanded voting shares will be reduced from the current 64% to about 36%," PLDT said in a statement accompanying the disclosure. The board decision, reached during a meeting Tuesday, will be on the agenda of a special stockholders’ meeting next Sept. 20. The 1987 Constitution limits foreign ownership in public utility firms to 40 percent. In a ruling, the Supreme Court said foreign investors in PLDT exceeded the constitutional provision. "In other words, foreigners hold 64.27 percent of the total number of PLDT common shares while the Filipinos hold only 35.73 percent. Such amount of control unmistakably exceeds the allowable 40 percent limit on foreign ownership of public utilities expressly mandated in Section 11, Article XII of the Constitution," the SC said in a 43-page ruling penned by Senior Associate Justice Antonio Carpio. PLDT said its board’s decision will align the firm’s capital structure with those of many listed firms in public utilities, mining, and property sectors. It explained that the decision was meant "to safeguard the interests of its consumers, shareholders, holders of its securities and lenders." “PLDT believes that its current share structure is in full compliance with the Constitution, all applicable laws and regulations and various opinions of the Securities and Exchange Commission and it is prepared to exercise all its legal options in relation to the Supreme Court’s ruling in the Gamboa case," PLDT chairman Manuel V. Pangilinan said. — VS, GMA News