PSE hits back at Holcim

MANILA, Philippines — The Philippine Stock Exchange (PSE) has refused to take the blame for the tax treatment faced by Holcim Philippines in relation to its trading suspension and the tender offer of its major shareholder Holderfin B.V.

The PSE slapped a trading suspension on Holcim shares last June 29 after the company’s public float fell below the minimum public ownership (MPO) requirement of 10 percent.

This happened as a result of Holderfin’s purchase of a 9.22 percent of Holcim’s outstanding capital stock from another shareholder, Sumitomo Osaka Cement Co. As a result, Holcim’s public float went down to 5.05 percent.

Holderfin then made a tender offer to minority shareholders following its move to increase its stake in the listed cement company.

However, since trading in Holcim shares is presently suspended, the sale of the tendered shares will be subject to capital gains tax (CGT) and documentary stamp tax (DST) instead of the standard stock transaction tax (STT), the PSE said.

The PSE said this tax treatment is expressly provided for in Bureau of Internal Revenue (BIR) Regulation 16-2012 that requires every sale, barter, exchange or other disposition of shares of stock of a publicly listed company which is non-compliant with the MPO to be subject to CGT and DST.

Aside from the applicable tax rate, the shareholders have to facilitate all the documentary requirements, including the relevant tax clearance from the BIR, needed to transfer shares sold outside of the PSE.

Holcim said this happened because the PSE denied its appeal to lift the trading suspension slapped on the company.

Against this backdrop, Holcim said on Friday that the purchase by Holderfin, acting as the bidder in the tender offer, and the transfer of the tender offer shares from the tendering shareholders of the company to Holderfin will now have to be effected outside the facilities of the PSE.

“Shareholders who wish to participate in the tender offer are strongly urged against tendering their shares at the last minute to allow sufficient time to correct any deficiency in their application (or any document submitted in support thereof),” Holcim said.

In response, the PSE said “it takes strong exception to this “finger-pointing” attempt of the company.

“The lifting of the suspension is not a discretion or prerogative that can be exercised by PSE. It is a regulation covered and imposed under BIR RR 16-2012. PSE has always upheld and will continue to uphold, not violate, existing laws and regulations,” the PSE said in a statement over the weekend.

Instead, the PSE said Holcim and Holderfin instead are at fault because they did not consider the interest of the public shareholders before implementing the share transaction between Holderfin and Sumitomo. Holderfin is also part of the Holcim Group, the parent company of Holcim Philippines.

“They should have thoroughly considered the repercussions of the Holderfin share purchase on its public float before implementing the same. There were several publicly listed companies that have similarly tendered for their shares in the last five years in preparation for their delisting from the PSE,” the bourse operator said.

“These responsible companies made sure that before executing any transaction or corporate action, they would not breach the MPO and get the trading of their shares suspended.

“Accordingly, the sale of their tendered shares was done through the facilities of the exchange thereby subjecting the transaction to just the STT, to the best interest of its public shareholders,” the PSE said.