Point of Law

A shareholders’ association at last!

/ 03:05 AM June 21, 2012

Next week or on June 27, to be more exact, the Shareholders’ Association of the Philippines (SharePhil) will be launched in simple ceremonies at the Dusit Thani Hotel in Makati City.

The launching of this organization heralds the birth of shareholder activism or engagement in the Philippines.


Shareholder vigilance or engagement is widely practiced in advanced markets like Australia, Japan, Singapore, South Korea, United States and United Kingdom.

It is a powerful weapon against corporate abuses and a key instrument in instilling a culture of good corporate governance in a company.


In some markets, shareholders have been known to actively seek seats on the board of companies or, in extreme cases, ask for the removal of the CEO.

As early as 2009, during my term as president of the Philippine Stock Exchange, I advocated for shareholder activism or engagement as a means of investor protection. Experience has indubitably shown that the more protection the investors get from the market, the more attractive that market becomes and, accordingly, the faster the market becomes developed.

Interestingly, our stock market is one of the oldest in Asia but remains to be one of the smallest, having been overtaken by much younger but more proactive and progressive markets. Investor protection is a key issue confronting our market.

But what exactly is SharePhil?

SharePhil, as the name implies, is a group primarily intended to protect shareholders’ rights. Its vision is to be the leading institution and catalyst in the protection and promotion of shareholder rights, duties and responsibilities. Its mission is to be a major player in promoting domestic capital market development through advocacy, education and enlightenment of shareholders.

SharePhil’s core values are best expressed in the acronym called “FAITH to the Investor”, which represents Fairness, Accountability, Independence, Transparency and Honor.

Shareholder empowerment


How will SharePhil distinguish itself from other organizations promoting corporate governance in the country?

Unlike other organizations, such as the Institute of Corporate Directors (ICD), which focuses on corporate governance at the company level, SharePhil will focus on the investor level.

SharePhil rests on the philosophy that an enlightened and informed investing public is essential for investor protection. Empowering shareholders promotes good corporate governance as it provides balance of power between the insiders of the company and its shareholders at large.

SharePhil aims to do this by providing investor-education programs to its members and the investing community at large. For example, investors need to be educated on their basic rights under the law to make them more vigilant. Shareholders also need to be educated on the risks of investing to avoid false expectations on their part. Likewise, they have to be educated on their obligations as shareholders to make them more responsible investors.

SharePhil is also envisioned to be the voice of minority shareholders. It will advocate for investor rights in relevant fora, be it in shareholders’ meetings or before regulators and Congress. Along this line, an immediate project of SharePhil is the attendance at or preparation of shareholders for stockholders’ meetings.

This is in recognition of the fact that these meetings are good opportunity for shareholders to show proactive vigilance in the conduct of the affairs of their companies.

Unlike other shareholder groups in other jurisdictions, however, SharePhil’s approach will be through friendly and constructive engagement with the management and boards of companies.

This approach is based on the premise that the shareholders of a company and its officers and directors are business partners, and resolving issues in a non-adversarial and speedy manner will ultimately inure to the benefit of the shareholders.

It is only in extreme cases that SharePhil will lock horns with the company and take them to court. It will endeavor to resolve issues on investors’ rights inside the boardroom rather than the courtroom, so to speak.

The model

The founding trustees of SharePhil envision it to be largely similar to the Securities Investors Association for Singapore (SIAS), a non-profit organization founded in 1999 to promote investor protection. Today, SIAS is the largest organized investor group in Asia, with almost 70,000 retail investors as members.

It has successfully organized some 500 investor education programs ranging from basic investment seminars for novices to certificate courses for investment savvy investors. Thus far, more than 60,000 retail investors have benefited from these programs, most of which are offered free.

David Gerard, a lawyer who founded SIAS and internationally respected advocate for investor protection, will grace the launching of SharePhil on June 27.

(The author is the co-managing partner of the ACCRALAW offices and is the former president and chief executive officer of the Philippine Stock Exchange. He may be contacted through [email protected])

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