SEC orders Philcomsat to hold stockholders’ meeting by April 17

The Securities and Exchange Commission (SEC) has ordered publicly listed Philcomsat Holdings Corp. (PHC) to hold a stockholders’ meeting on or before April 17, 2006.

PHC has not held its annual membership meeting since 2004 due to a pending dispute between the Ilusorio group and the group of Amb. Manuel Nieto over the composition of the governing board of directors of the firm’s parent companies.

Citing the Corporation Code, the SEC said the term of the board of directors of a stock corporation is limited only to one year.

PHC’s board and management is headed by Benito Araneta as chairman. Members of the Nieto group were elected to the PHC board during a stockholders’ meeting on Aug. 13, 2004.

The SEC order was in response to complaints filed by individuals stockholders, including Victor Africa, who owns a combined 81 percent of PHC’s holding firm Philippine Communications Satellite Corp. (Philcomsat).

In a separate complaint filed with the SEC, minority shareholder Jose Ma. Ozamiz alleged that it was the modus operandi of the Nieto group to deliberately not call a stockholders’ meeting to perpetuate themselves in office.

Ozamiz pointed out that PHC conducted a stockholders’ meeting in 2004 only after the SEC intervened, also in response to stockholders’ complaints that the company had not been conducting the annual meetings for several years prior to 2004.

In its order, the SEC cited a Supreme Court decision dated June 15, 2005, which was made final in a resolution dated Sept. 7, 2005, declaring that Independent Realty Corp. (IRC) and Mid-Pasig Land Development Corp. ceased to be stockholders of POTC (which owns 100 percent of Philcomsat) in January 2000 after their shares were cancelled and new stock certificates were issued in the name of the Republic of the Philippines for 35 percent of POTC stock and five percent in the name of Potenciano Ilusorio.

The Supreme Court decision is significant because the Nieto group had been claiming that it was elected to the POTC and Philcomsat boards based on the 40-percent shares voted by IRC and Mid-Pasig after 2000.

On the other hand, the incumbent POTC and Philcomsat boards, both chaired by Erlinda Bildner and Victor Africa as president, were elected during a stockholders’ meetings that allowed the government to vote 35 percent of shares and did not allow IRC and Mid-Pasig to participate.

In addition to the order for the immediate holding of a stockholders’ meeting, the SEC said Ozamiz’s petition for the issuance of a cease-and-desist order against the Nieto group would be endorsed to the appropriate department of the commission for action.

Ozamiz sought the hold order to prevent the Nieto group from allegedly dissipating PHC’s assets, which are mainly in the form of cash deposited in banks and invested in the money market.