SMC to sue SEC for ‘onerous’ fine
San Miguel Corp. will take legal action against the Securities and Exchange Commission after the corporate regulator imposed an “onerous” fine on the conglomerate for its alleged late filing of supporting documents disclosing its investment in Manila Electric Co. in 2012.
In a press statement, San Miguel president Ramon Ang said the country’s largest business group “will contest in court” a P769.3-million penalty on it by the SEC for the five year-old issue—the biggest levied by the SEC on a registered company in recent years.
Ang described the monetary penalty as “excessive and unreasonable.”
“Technically, there was no late disclosure considering the relevant information were provided and disclosed to the SEC and Philippine Stock Exchange through the submission of SEC form 17-C,” he said, explaining that because of this, the public was “adequately and properly informed” of the details of the share sale transaction inclusive of the purchase price, number of shares, San Miguel’s 27-percent stake in Meralco and the terms of payment.
The events surrounding the battle for control over Meralco between San Miguel and the Metro Pacific Group of businessman Manuel Pangilinan in the previous decade were covered extensively by the local and international media.
The SEC ordered San Miguel to pay the fine for late filing of SEC forms covering the initial statement of beneficial ownership of securities (form 23-A) and the statement of changes in beneficial ownership of securities (form 23-B).
Under the law, every material fact or event that could affect investors’ decisions related to securities should be reported within five days using SEC through several disclosure formats, which San Miguel said it did. The conglomerate is protesting the decision of regulators to penalize for the late submission of supporting documents to its original disclosure.
“The penalty is highly disproportionate to the infraction attributed to the company considering that the disclosures made by San Miguel to both SEC and PSE were extensive enough to prevent market speculation and other similar fraudulent acts,” Ang said.
The fine was based on a percentage of the value of the multibillion-peso transaction.
Ang said San Miguel “committed no violation since all the transactions were disclosed in a timely manner to the PSE and to the SEC through letters and through SEC Form 17-C.”
“However, the SEC disregarded our timely reports and imposed the onerous penalty and computed it based on a percentage of the value of the transaction,” he said. “Such timely disclosures show that there was no intent to withhold information and the public was fully informed of the Meralco transactions.”
He added the SEC—in spite of the full disclosures made—imposed the sanction for the late filing of additional forms “which merely reiterated the information previously submitted.”
“Good governance is an integral part of how we do business and we are committed to operating with the highest standards of ethical behavior,” the San Miguel chief said. “With the SEC’s decision, we will be constrained to seek relief from the court. Hopefully, the court will understand and appreciate the position of the company.”
The controversy stemmed from San Miguel’s 2008 acquisition of a large stake in Meralco—whose share price then had dipped to as low as P60 per share—from the Government Service Insurance System. The conglomerate also went on to accumulate additional shares in the country’s largest electricity distributor from the open market.
San Miguel’s entry was backed by Meralco’s then chair Manuel Lopez, but was opposed by his elder brother Oscar who, fearing a hostile takeover, invited instead Pangilinan’s group to become the Lopez family’s strategic partner in the firm.
Meralco eventually ended up under the control of Pangilinan’s Metro Pacific Investments Corp., with the Lopez family retaining only a small stake in the power utility. San Miguel later sold its nearly one-third stake in the company to the Gokongwei family.
