When big is small

Recently, Chris Leahy, representing the Asian Corporate Governance Association (ACGA), requested to interview some Trustees of the Shareholders’ Association of the Philippines (SharePHIL).  ACGA, whose members includes big international funds, multinational banks, corporates and educational institutions, wanted Leahy to find out what SharePHIL is doing to contribute to good corporate governance in the Philippines.   Leahy, for the past many years, has been conducting interviews with Philippine institutions on behalf of ACGA, which ranks countries in accordance with how they meet good governance standards.

We were quite surprised why ACGA would be interested in SharePHIL, an Association dedicated to promoting and protecting the interests of small or minority shareholders in companies.  As it turns out, even if ACGA represents big investors who control considerable amount of funds, these investments still constitute a minority in the companies they invest in.  Thus, while large in numbers, they remain as a minority group and rightfully identify with SharePHIL’s mission and advocacies of looking after small investors.

Our conversation drifted to how the Philippine capital market remain small compared to other Asian markets with the 10 percent public float still remaining an issue for some public companies.   What role can SharePHIL play to help in the growth of the market?  Since SharePHIL focuses on promoting the rights and interests of minority shareholders and small investors, it can play a role by attracting and mobilizing small investors to channel their savings to equities and bonds.  But to succeed in this goal, small investors must understand, and not fear, entering the market.  SharePHIL believes these investors can be convinced to participate in the market by educating them, a job that is performed by many financial institutions in marketing their products and services.  SharePHIL can complement this job by empowering this minority group by providing them with the tools and knowledge on how they can be effective partners of companies in elevating the standards of good governance as far as small shareholders are concerned.  The positive by-product of this cooperative effort is the elevation of our country’s international ranking in governance, where the protection of the minority investors carry much weight in terms of meeting good governance standards.

Now on its second year of existence, SharePHIL can lay claim to a few achievements and to many new beginnings.  With funds raised by its membership and a few corporate friends, we now have a portfolio of publicly listed companies (PLCs) whose treatment and attitude towards minority shareholders we want to observe.  As shareholders and not just outsiders, we are able to legitimately participate in Company events and meetings, receive official company communications and contribute comments and suggestions on how relationship with minority shareholders can be enriched.

SharePHIL’s motto is “to cooperate with companies and to contribute to the enhancement of their relationship with all shareholders, especially the minority shareholders”.  For instance, in the annual GSMs of PLCs which SharePHIL representatives attend, we come prepared, ask enlightening questions, even become resource persons to other shareholders who are shy to ask questions.  After the meetings, we give our comments and observations to companies so that future meetings can be more proactive and interactive, veering away as much as possible from scripted and canned presentations.  In some instances, companies receive our recommendations positively and agree to incorporate these in future meetings.

There are many other issues SharePHIL wishes to resolve.  Some of these are how beneficial owners of shares can participate in company meetings since their shares are in scripless form in the brokers’ names; how corporate issues brought to the regulators by small shareholders can be resolved within a reasonable time; how compliance with PSE and SEC rules can be monitored; and other issues which crop up as these are brought to our attention.

While SharePHIL was inspired by the Securities Investors Association, Singapore (SIAS), SharePHIL was not born out of a controversy like SIAS.  SharePHIL was created by like minded professionals who volunteer time and talent to espouse a cause that needs a champion.

Come June 18, SharePHIL, in cooperation with the Management Association of the Philippines (MAP), which gave life to SharePHIL two years ago, will hold its SUMMIT themed  “Philippines: Your investment destination.” Why the theme?  Only if we get more investments can we create more companies, can we create more jobs which will enable our people to earn enough to save and invest.

The Summit features much sought after eminent persons in their respective territories.  We all know and admire Mr. Manuel V. Pangilinan (MVP) who has made the practice of good governance a way of life in all the companies he leads, for which he and his companies have been given recognition by many awarding bodies.  We also have Atty. Lilia de Lima, perhaps the only government official who has continuously served under all Philippine Presidents since she was appointed as Peza Director General by President Fidel Ramos.  She is everyone’s idea of an honest and effective public servant that some quarters want her cloned and placed in every government office.

Ambassador Asif Anwar Ahmad of the British Embassy speaks like a native Filipino and even before his stint as UK Ambassador to the Philippines has experienced doing business with the Philippine government and private Filipino businesses.  He has the perspective of a foreign investor and his wide exposure in different developing countries enables him to share lessons we can all learn from.

Our panelists/reactors are a match to the wit and wisdom of our keynote speakers.  They are Cora de la Paz Bernardo of BDO, Ed Chua of Shell Companies in the Philippines, Ed Francisco of BDO Capital and Investment Corp., Joey Lim of Metro Pacific Investments Corp., Bill Luz of National Competitiveness Council, and from media, Tony Lopez of BizNewsAsia.

We welcome the public to spend an afternoon with our three respected and courageous governance practitioners and a panel of high powered technocrats on June 18, Wednesday, from 1:30 to 5:00 p.m. at the Dusit Thani Ballroom.  After this Summit, we hope you too will be a SharePHIL member and/or supporter.

(The author is chair of SharePHIL and past president of the Management Association of the Philippines. She is the President and Vice Chair of the Philippine Hoteliers, Inc./Dusit Thani Manila. Feedback at <[email protected]>  and       < [email protected]>. For previous articles, please visit www.map.org.ph)