Regulators probe trade of Abra Mining shares
Market regulators are investigating the trading of unlisted shares of abra Mining and Industrial Corp., which goes against the rules of the Philippine Stock exchange (PSE) and the revised Corporation Code of the Philippines.
Shares of abra Minng were suspended for trading since thursday. It was last traded on March 3 and closed at P0.0046 per share.
according to a joint statement released by the Securities and exchange Commission, the PSE and the Philippine Depository and trust Corp. (PDTC), abra Mining’s fully paid issued and outstanding shares exeed the number of the company’s listed shares and also those lodged with the PDTC.
according to the rule, only securities approved for listing should be lodged with the PDTC for trading.
“Shares [of abra Mining] which are not yet reflected in the company’s books have been lodged with PDTC and are being traded, in contravention of the provisions of republic act No. 11232, or the revised Corporation Code of the Philippines,” the joint statement read.
In a parallel preliminary factfinding investigation, the SEC found that abra Mining has 258.95 billion shares lodged with PDTC as of February 16. the figure is 186.01 billion shares higher than the 72.94 billion shares listed on the PSE.
In its 2019 audited financial statements, abra Mining reported issued and outstanding capital stock of 99.29 billion shares.
the law defines outstanding capital stock as “the total shares of stock issued under binding subscription contracts to subscribers or stockholders, whether fully or partially paid, except treasury shares.” even shares, which have not been fully paid, are considered issued and must be reflected on the company’s books.
the Corporate Code, however, said that “no certificate of stock shall be issued to a subscriber until the full amount of the subscription together with interest and expenses [in case of delinquent shares], if any is due, has been paid.”
to lodge securities with PDTC, the certificates covering the securities must be delivered to the transfer agent. Once lodged in the central depository, the securities may be used for settlement of exchange trades.
the transfer agent, as an extension of the corporate secretary of the corporation, has the pertinent information, and has the sole authority and duty to certify that each share meets PDTC’S and the Pse’s respective requirements for lodgment.
among the requirements is that the transfer agent must issue or register only those securities of the corporation that are authorized for issuance and listing by the PSE, and must notify PDTC if the shares delivered are found not valid or defective, or those counterfeit, altered or invalidated.
“records showed that each and every [abra Mining] share that had entered the system was confirmed and cleared by the transfer agent for lodgment,” it said.
the SEC said it will continue to investigate the issue to also find systemwide measures to prevent its recurrence.
the company was ordered to submit its proposed actions to address the discrepancies in its issued, outstanding, listed and lodged shares.
abra Mining was incorporated on September 28, 1964 and is also engaged in the processing and manufacture of non-metals for industrial and commercial purposes at wholesale only. as of end-2019, the company has not started any commercial operations but it has 4 approved mining claims covered by a mineral production sharing agreements. these are Bucay Baticang Limestone in Bangued and alluvial Gold Magnetite Project, Capcapo Gold Copper Project, Patok Gold Silver Copper Project and Sanvig alluvial Gold and Magnetite Iron Sand Deposits.