Yuchengco camp wins in controversy-marred PSE elections

Thwarting a planned takeover by the Securities and Exchange Commission, the Philippine Stock Exchange elected yesterday its new board of directors after the opposition group failed to secure a restraining order from the court.

PSE chairman Vivian Yuchengco said the exchange was able to muster the needed shares to constitute a quorum despite the challenge posed by the opposition camp led by broker Filomeno Francisco.

The group of Francisco, however, has vowed to pursue its case against the PSE Nomination and Elections Committee (Nomelec) and the SEC. He said he would seek the nullification of the results of yesterday’s meeting to prevent the newly-elected directors from assuming their posts.

"We are left with no option but to go to court. We want to invalidate that meeting and disenfranchise the new board. The real issue is the shortlisting. We will sit down with our lawyers and discuss the correct approach to pursue our case," Francisco said.

Elected as directors, representing the large brokers were Alicia Arroyo of RCBC Securities, Gregorio Kilayko (ABN Amro Securities), Marita Limlingan (Regina Capital), Joseph Madrid (Philippine Equity Partners Inc.), Myron Timothy Papa (Papa Securities). William Ang of Astra Securities and Rodolfo Cruz of HK Securities were also elected to represent small brokers.

Under the Securities Regulation Code, eight of the 15 board seats are reserved for non-broker directors.

Completing the 15-man board of the PSE are non-broker directors former Customs Commissioner Tomas Apacible, former banker Peter Favila, incumbent PSE president Ernest Leung, former Socioeconomic Planning Secretary Cayetano Paderanga, WG&A president Enrique Aboitiz, San Miguel Corp. president Ramon Ang, Insular Life Assurance Co. Ltd. chairman and president Vicente Ayllon, and lawyer Francis Lim of the ACCRA Law offices.

Except for the four independent-directors who were reappointed by the PSE Nomelec to the board, all the non-broker directors were elected by the PSE membership.

The Nomelec shortlisted the nominees for the four independent non-broker positions to only four, effectively allowing the four incumbent directors appointed to retain their positions.

The group of Francisco argued against the shortlisting of the independent directors and stated that all directors, brokers and non-brokers should be directly elected by the shareholders and not appointed in this case by the Nomelec, chaired by Jose Aquino, head of the SEC’s Markets Regulations Department.

Disappointed over the process of selection for PSE non-broker director nominees, Francisco, Eddie Gobing of Lucky Securities, Edwin Luy of Triton Securities, Federico Lim of Belson Securities, Harry Liu of Summit Securities, Paulino Soo of Abacus Securities, Joseph Roxas of Eagle Equities, and Gregorio Chan of Tri-State Securities, pulled out from the elections.

Arroyo, who was elected as the second chairwoman of the PSE, has thanked all brokers who participated in the meeting yesterday. "I would like to thank all PSE shareholders and representatives who have stuck to their convictions and ignored intimidation and harassment just to be here today. What happended today is important for the independence of our institution. We are aware of the challenges that lie ahead and it is time for all parties to set aside our differences," she said.

"We have listened to many shareholders and stakeholders and are willing to listen and bring together all energies to bring one agenda for the stock exchange. We cotninue to work hard to create the conditions for a successful listing by adding value and growing buiness for all," Arroyo further said.

It will be recalled that the SEC earlier threatened to create a management committee to take over the exchange if the PSE failed to elect a new board yesterday.

Most of the PSE member-brokers expressed their vehement objection to the SEC proposal because they felt this would in effect clip the powers of the bourse as a self-regulatory organization.

The Nomelec and SEC defended the shortlisting process which they said was in compliance with the circular issued by the corporate watchdog in November last year, which provides the basis for selection of independent directors in corporations, including the demutualized PSE, in accordance with the Code of Corporate Governance.

The circular provides that the independent directors should not be allowed to solicit votes for themselves or be subject to election by stockholders.

The group of stockbroker-businessman Robert Coyiuto Jr. alleged that the PSE election rules are in violation of the Corporation Code, which mandates an election. They said the nomelec should not have appointed the independent directors, but rather allowed brokers and other participants to vote.

They said the election of non-broker representatives to the PSE board should have been done through a free ballot system rather than an appointment process by the Nomelec led by the SEC.