Batting again for the public

THE stockholders of Integrated Microelectronics Inc. (IMI) will gather on April 13 this year for their annual meeting. The date happens to fall on a Friday, according to the statement (DIS) posted on March 12 on the website of the Philippine Stock Exchange (PSE).

Apparently, the family, or clan, who owns IMI does not believe in superstition that Friday the 13th is a bad omen.

Superstitious or not, IMI will of the increase in the company’s authorized capital stock by 550 million common shares, or 22.449 percent, to 3 billion common shares from 2.45 billion common shares. The board approved on Feb. 20 the expanded capital of P3 billion computed at par value of P1 per share.

Being a listed company, IMI said in the same DIS that “only stockholders of record at the close of business on March 2, 2018 are entitled to notice of, and to vote at, this meeting.”

Aside from the usual items in the annual meeting’s agenda, IMI also said it will also seek stockholders’ approval of the “election remuneration.”

Sycip, Gorres, Velayo & Co. is listed as IMI’s present external auditor on the PSE website.

Capital increase

In a PSE posting regarding the amendment to its Articles of Incorporation, IMI said it needed the additional capital for “business development initiatives and operational expenses.”

Earlier this year, that is, on Jan. 30, IMI in a press release announced the “PSE board approval for up to P5 billion stock rights offer.” In the same statement, the company said it obtained the exchange’s approval of its stock rights offer (SRO) on Jan. 24, 2018.

In complying with the full disclosure rule, IMI also informed the PSE that the executive committee approved on Nov. 12, 2017 the rights offering, which entitles a stockholder to one rights share for every 5.3351 common shares.

Then a PSE posting dated Feb. 8, 2018 said that IMI priced at P14.28 per share its 350 million common shares. At the price of P14.28 per rights share, it would raise P4.998 billion.

Based on the rights offering of 350 million common shares, IMI still has 200 million common shares remaining out of the 550 million increase in its authorized capital stock to 3 billion common shares from 2.45 billion common shares.

AC Industrial Technology Holdings Inc. and Resins Inc., which have a combined ownership equivalent to 63.46 percent according to their entitlement in the rights share and any unsubscribed rights share after the mandatory second round of the SRO.”

3 principal stockholders

A public ownership report (POR) as of Dec. 31, 2017 listed three principal stockholders who

hold 1.385 billion IMI common shares, or 74.17 percent of 1.867 billion IMI outstanding common shares.

As the majority stockholder, AC Industrial Technology directly owns 945.538 million IMI common shares, or 50.64 percent. The two others are Resins, with 239.413 million IMI common shares, or 12.82 percent, and EPIQ N. V. with 200 million IMI common shares, or 10.71 percent.

Ayala Corp., which was identi holds 1.38 million IMI common shares, or 0.07 percent, as of Dec. 31, 2017.

The 11-person board, according to the same POR, holds 22.055 million IMI common shares, or 1.18 percent. The total holdings of the company’s 11 directors consist of 1.956 million directly owned IMI common shares, and 20.099 million indirectly owned IMI common shares.

Minus all the insiders’ holdings, including 68.709 million IMI common shares, or 3.68 percent, that IMI allocated to its employees and executives, the public stockholders are left with 386.485 million IMI common shares, or 20.7 percent.

Due Diligencer’s take

Like other listed companies, IMI also does not allow the public to name their nominees to the board despite their ownership equivalent to 20.7 percent. It simply listed outsiders as holders of 68.709 million IMI common shares but deprived them of the right to be represented on the board.

Don’t IMI’s public stockholders want to send their own repre- sentatives to the board?

Even officials of the Securities and Exchange Commission the public stockholders of listed companies gain entry to the board. How this is happening or is allowed to happen is a perennial problem that only the could possibly resolve.

As Due Diligencer has been pointing out in a few pieces that have appeared in this space, listed companies should not be allowed to credit the public with many common shares in their PORs. Instead, they should include the public among subscribers to other classes of shares, such as voting preferred shares.

Again, will it be asking too much if all listed companies would allow their public stockholders at least one board seat? Just asking.