Media giant ABS-CBN Corporation is facing the issues that Solicitor General Jose Calida raised.
This present controversy places the entertainment and media group at the brink of closure by the culmination of March.
Calida alleged that ABS-CBN Corporation issued Philippine Depository Receipts (PDRs) to foreign nationals.
The government official asserted that this makes the company a violator of the Constitution, and deserves a penalty.
Philippine news portal ABS-CBN News reported that, similar to firms based outside the Philippines, other Filipino firms issue PDRs.
Depending on the market, foreign companies usually issue depository receipts.
To enlighten the public witnessing the debacle between the government and ABS-CBN Corporation, ACCRA Law senior partner Francis Lim explained PDRs.
On Wednesday, Lim spoke at “Early Edition,” a program aired on the ANC Channel. He said that the PDR system resembles a spectator in a horse racing match.
The watcher can purchase a race ticket to place his bet on the contest. However, this document does not entail the ownership of the horse, Lim elaborated.
He explained that, if that animal wins, though, the bettor has a part in the winnings.
Lim went on to say that PDRs offer the holder the prerogative to convert the receipts to shares of stock.
Plus, they give him the right to get dividends that the issuer distributes, the former president of the Philippine Stock Exchange (PSE) said.
However, he pointed out that foreigners are not qualified to own shares. Lim explained that, at most, what PDRs give is the right to own a stock.
Yet that prerogative is subject to the law he said. Lim cited the example of a foreigner, affirming that such an individual is not qualified from owning and converting a PDR into a share.
ABS-CBN Corporation has maintained that the Securities and Exchange Commission assessed and approved the PDRs that its holding firm ABS-CBN Holdings Corporation issued.
Lim elucidated that, in this case of the Philippine entertainment and media behemoth, ABS-CBN Holdings Corporation issued the PDR.
This holding company of ABS-CBN Corporation possesses ownership of the shares in the media and entertainment organization. Moreover, it owns these shares similar to the other company stockholders, Lim said.
He pointed out that a holder of a PDR is not even an ABS-CBN Holdings shareholder. The former top executive at the PSE cited that a PDR is dissimilar from shares of stock.
This fact is whether the stock is preferred or common, giving the holder the right to vote.
Lim mentioned that preferred shareholders also receive some prerogatives that common shareholders do not enjoy.
He relayed that common shares denote the rights to receive dividends, vote, and own the company. Furthermore, he remarked that a PDR offers the holder the entitlement to convert it into shares if he is qualified.
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