SMC disputes record fine for late disclosure

San Miguel Corp. will contest the Securities and Exchange Commission’s decision to impose a fine on the company for the late filing of additional documents pertaining to its purchase of additional shares in Manila Electric Co. (Meralco).

SEC slapped a P769.3 million fine on SMC — the biggest monetary penalty imposed by the corporate regulator in recent years – for alleged late disclosure.

It denied SMC’s appeal on Nov.21.

SMC president and chief operating officer Ramon Ang said the amount is excessive and unreasonable.

“Technically, there was no late disclosure considering the relevant information were provided and disclosed to the SEC and the Philippine Stock Exchange through the submission of SEC form 17-C. As such, the public was adequately and properly informed of the details of the share sale transaction inclusive of the purchase price, number of shares, equivalent percentage shareholdings in Meralco — 27 percent — and the terms of payment,” Ang said.

Ang said the penalty is highly disproportionate to the infraction attributed to the company considering the disclosures made by SMC to both the SEC and the PSE were extensive enough to prevent market speculation and other fraudulent acts.

“SMC committed no violation since all the transactions were disclosed in a timely manner to the PSE and to the SEC through letters and through SEC Form 17-C. However, the SEC disregarded our timely reports and imposed the onerous penalty and computed it based on a percentage of the value of the transaction,” Ang said.

He said such timely disclosures show that there was no intent to withhold information and the public was fully informed of the Meralco transactions.

Good governance, Ang said, is an integral part of how SMC conducts its business.

“We are committed to operating with the highest standards of ethical behaviour. With the SEC’s decision, we will be constrained to seek relief from the court. Hopefully, the court will understand and appreciate the position of the company,” Ang said.

SMC was fined for late filing of notices on its acquisition of an initial 10-percent stake in Meralco and the disposition of shares in the power distributor to its unit, San Miguel Purefoods.

SEC said the whole system of reportorial requirements, designed to ensure transparency and fairness in the securities market, would be undermined if it accepts SMC’s explanation.

SMC completed its acquisition of a 27-percent stake in Meralco in 2011 after buying out the Government Service Insurance System’s stake in the power distributor for P27.1 billion.