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Brokers sue PSE, SEC over bourse poll rules

By Danessa Rivera

04/22/2010

The Philippine Association of Securities, Brokers and Dealers Inc. (Pasbdi), which is the umbrella group of stock market participants, has sought a court order to bar the Securities and Exchange Commission (SEC) and the Philippine Stock Exchange (PSE) from implementing rules for the coming bourse elections which the group said would limit voting rights.

Pasbdi filed a petition for injunction with prayer for issuance of temporary restraining order and writ of preliminary injunction in the Regional Trial Court (RTC) of Pasig against the SEC, the PSE’s Nominations and Elections Committee (Nomelec) and the PSE.

In a disclosure, PSE confirmed that it has received a summons from the RTC Pasig.

Pasbdi wants the court to stop the PSE or anyone with authority to implement the revised rules of its Nomelec, specifically Rules 3 and 4 which “effectively limits, restricts, curtails or in any manner diminishes any or all of the individual petitioners’ voting rights in any stockholders’ meeting, including the forthcoming Annual Stockholders’ Meeting of the PSE on May 1, 2010.”

In line with this, Pasbdi also wants the court to bar SEC from putting into effect its order to the PSE. The order, dated March 8, 2010, requires the PSE to limit the voting rights of brokers to 20 percent starting this year.

The stock brokers also sought the barring of the PSE 2010 Nomelec from enforcing the SEC order and the 2010 Nomelec Rules.

The Securities Regulation Code authorizes that only a maximum of the 20 percent of the PSE can be owned by brokers and any other industry group.

With the refusal of brokers to sell their shares, the SEC decided to just limit their voting power to 20 percent despite owning more than 20 percent common shares.

As stated in Revised Nomelec Guidelines 2010, Rule 3 states that: “the number of brokers that may be elected shall correspond to the 20 percent ownership limit, provided that non-brokers may elect additional brokers to the board as long as the total number of brokers shall not exceed 49 percent of the board seats.”

Rule 4, on the other hand, states that “there will be three broker-director seats, eight non-broker director seats consisting of one president and three independent directors, four directors representing the interests of issuers, investors and other market participants, as well as four free seats comprised of either broker directors or non broker directors.”

The brokers said that SEC tramples on the right to enjoy the full benefits of their property, in this case, the voting rights that come with the ownership of their shares.

Recently, the PSE disclosed a list of candidates vying for the 15 seats in the PSE board of directors in the elections to be held during the bourse’s annual stockholders meeting on May 1.

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