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PDRs in ABS-CBN

"Can foreigners qualify to own shares in a media organization?"

 

 

Solicitor General Jose Calida’s quo warranto petition against ABS-CBN, which he filed before the Supreme Court, brings up several interesting questions about the Lopez-owned network. Among Calida’s grounds are the issuance of Philippine Depositary Receipts, allowing foreigners to own shares in the network contrary to the 1987 Constitution.

According to an article by former Senate President Juan Ponce Enrile, a thinly capitalized corporation named Worldtech Holdings Corporation was organized with an authorized capital stock of only P1,000 divided into 1,000 common shares and with a par value of P1.00. The owners of 400 subscribed and issued shares of Worldtech Holdings were Lopez Inc., 50 percent, and certain directors and officers of Lopez, Inc., 50 percent. All were admittedly Filipinos.

The primary purpose of Worldtech Holdings was to invest in, purchase and hold real and personal property, shares of stock, bonds, debentures, notes, evidence of indebtedness and other securities and obligations. This is all taken from the Securities and Exchange Commission.

On September 16, 1999, the name of Worldtech Holdings was changed to ABS-CBN Holdings Corporation.

Since then, this company never had any business of its own. It is more of a shell company crafted with no other business purpose of its own other than as sole issuer of Philippine Depositary Receipts and as a receptacle and custodian of common shares of ABS-CBN Corporation transferred to it from Lopez Inc., pursuant to a financial scheme devised by its Filipino owners.

Clearly, the creation of ABS-CBN Holdings was intended to simply circumvent and overcome the Filipino ownership requirement of the 1987 Constitution for mass media. This can be gleaned from its financial records in the SEC, according to Enrile.

In the words of Enrile, from these disclosures, the question is: What is the consideration, if any, received by Lopez Inc. to ABS-CBN Holdings’ 132,000,000 ABS-CBN shares before the closing of the PDR offering.

What is it about the 132,000,000 PDRs with an issue value of P46.00? Enrile said this was not clearly disclosed in the financial records of ABS-CBN Holdings to the SEC. Enrile also asked, was the transfer of those shares free from income taxation?

From all these disclosures, it would indicate that the intention of the holders of those PDRs, who are obviously foreigners, to benefit from the activities of the ABS-CBN network since all of the dividends of the corporation are likewise enjoyed by the PDR holders.

Santa Banana, with 132,000,000 PDRs at P46.00 each, that is easily P6.072 billion! That is what was not disclosed to the SEC.

The Solicitor General should dig deeper into this. With so many PDRs floating around, was that not a violation of the Constitution?

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President Duterte is firm in his statement that so long as there is no vaccine against COVID-19, there will be no classes in public and private schools.

The Department of Education will have to resort to online classes. But how will this be done as not all school children have computers at home? Another option being considered is the use of radio. I agree that radio is the best way to communicate.

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The passage of the anti-terror bill is a contentious issue. More and more lawmakers are withdrawing their support. With both labor and business joining the protests, there must be really something wrong with it.

My gulay, under the proposed bill, persons arrested without warrants shall be detained for 14 days, longer than what is provided for in the Constitution.

If it is true that Senate President Tito Sotto said in jest that with this bill we would no longer need martial law, whether or not he was joking, he would actually be right!

Topics: Emil Jurado , Philippine Depositary Receipts , PDR , ABS-CBN , Solicitor General Jose Calida , Sen. Juan Ponce Enrile , Worldtech Holdings Corporation , Lopez Inc. , anti-terror bill
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