Stranded Abra Mining stockholders
After three years of questionable trading practices, the axe has finally fallen on Abra Mining and Industrial Corp.
Last week, the Philippine Stock Exchange (PSE) delisted Abra Mining from the local bourse after the Securities and Exchange Commission (SEC) had, after investigation, ruled that its directors, officers, transfer agent and some stockholders sold unissued and unlisted shares from 2015 to 2019, which is prohibited by the Securities Regulation Code and the Revised Corporation Code.
The erring parties were slapped a fine of at least P560 million. In addition, they have been disqualified from, among others, serving as employee, officer or director of registered financial intermediaries within five years.
With the delisting, its stockholders cannot sell their shares through the stock exchange. If they are able to sell them over-the-counter, e.g., in private transactions, the sale would be subject to higher capital gains tax.
They cannot avail of the stock transaction tax of 0.6 percent of the gross selling price or gross value in money of stocks sold, bartered or exchanged at the trading floor.
On account of the delisting, the PSE had advised Abra Mining’s minority stockholders to consult their legal counsels on the remedies or reliefs available to them under existing laws.
As in most cases of fraudulent stock transactions that involve company insiders, majority stockholders, who have seats in the board of directors, often laugh their way to the bank with their loot.
In effect, the PSE had told Abra Mining stockholders that they are on their own. They have to fend for themselves in finding ways and means, at their expense, to recover whatever monetary value they can salvage from their shares.
It was like saying, too bad, you bet on the wrong horse when you bought those stocks.
The PSE’s dismissive (or itis-not-our-problem) posture on the stranded stockholders is lamentable. It reflects badly on the reputation of integrity it projects to the public.
With its corps of lawyers, it would have been easy for the PSE to create a “help desk” that those stockholders can get in touch with for consultations or advice on what they can do to extract whatever benefits they can from their now untradable stocks.
Or better still, to make available free legal assistance to the stockholders, something PSE lawyers can efficiently undertake in light of their experience in past situations of a similar nature.
Note that in the PSE’s website, it declared that it “... is at the forefront of promoting corporate governance in order to develop the capital market through well-governed companies, ensure protection of shareholder rights and interests (underscoring supplied)...”
In case the recovery efforts would require recourse to judicial remedies, its in-house lawyers can take on that task as part of their regular duties and responsibilities to the bourse.
Assuming those lawyers do not have the expertise (or inclination) to go to court, the costs and expenses of securing the services of external counsel would hardly make a dent in the PSE’s coffers.
According to its website, the PSE’s net income for the period January to September 2023 was P575.65 million.
Recall that in recent years, the PSE had embarked on vigorous campaigns to widen the investment base of the capital market by encouraging Filipinos who have ample disposable income to invest in the stock market.
In fact, trading in stocks has been made a lot easier through GCash with AB Capital Securities as the brokerage firm. Some 500,000 GCash subscribers have reportedly availed of that facility.
It is common knowledge that the more stocks are traded, regardless of the manner by which it is done, the PSE invariably benefits by way of increased listing and trading fees.
With the way the PSE has treated Abra Mining’s stockholders, it is sending the subliminal message to the public that it would be good to invest in listed companies, but in case things go wrong with your investment through no fault of your own, don’t look to us for help.