MANILA, Philippines—After failing to get its shareholders’ approval last year, Philippine Long Distance Telephone Co. (PLDT) is set to put to a vote its plan to create new voting shares to increase the participation of Filipinos on its board.
The company said it had scheduled a special stockholders’ meeting for March 22 where amendments to its capital structure, involving the grant of voting rights for 150 million shares, would be discussed.
The move aims to address a Supreme Court decision in June last year that declared PLDT a company controlled by foreigners—violating a constitutional provision limiting the ownership of utilities to Filipinos.
“The Supreme Court decision… is not yet final and motions for reconsideration… have been filed by some of the respondents,” PLDT said over the weekend.
Respondents in the case include PLDT chairman Manuel V. Pangilinan and president and CEO Napoleon Nazareno.
But PLDT itself is not a party to the case.
Under the high tribunal’s decision, PLDT should not have included nonvoting shares when it computed its level of foreign ownership. These nonvoting shares are mostly held by minority Filipino shareholders, but bulk of PLDT’s voting stock is owned by Hong Kong’s First Pacific Ltd. and Japan’s NTT Docomo.
“PLDT maintains that its current share ownership structure fully complies with the Constitution,” the company said, noting that historically, corporate regulators have accepted nonvoting “preferred shares” as part of a company’s capital.
Under the company’s proposal, the 150 million voting shares will be converted from the company’s current stock of nonvoting preferred shares.
But even if PLDT fails to get the quorum of shareholders it needs—as what had happened did last year—to put the proposal to a vote, the entire exercise may not even be necessary to get the company’s level of Filipino ownership to the needed level.
Documents filed with the Philippine Stock Exchange showed that PLDT’s controlling shareholders—Hong Kong’s First Pacific Ltd. and Japan’s NTT Docomo—now hold just over 39 percent of PLDT’s total voting stock.
This followed the entry of the Gokongwei family’s JG Summit Holdings, which exchanged its controlling stake in Digital Telecommunications Philippines for an 8-percent stake in PLDT.
After the conversion of nonvoting shares, First Pacific and NTT’s interest in PLDT will be diluted even further to just 23 percent, while JG Summit will end up with just 4.75 percent.