WE all know that advocacy for the growth and improvement of the capital market, a dynamic and robust capital market will result in the ability to secure funds to finance the nation’s development activities.
This has been hampered, in part, by the difficulties in better regulating listed companies, particularly in matters of conflict of interest. However, more and more regulations are not always the best answer to ensure compliance. Regulators can always require companies to be more transparent (as, indeed, codes of Corporate Governance and Circulars do), but their ability to punish companies that commit serious abuses is limited due, in part, to the different government bodies that are involved.
The idea that recently came to light is that investors themselves, who, after all, should be motivated to protect themselves, should band together. Thus came about the organization of the Shareholders Association of the Philippines (SharePHIL) by a core group consisting of members of the Management Association of the Philippines (MAP) and some fellows from the Institute of Corporate Directors of the Philippines (ICD). This association was to serve as a catalyst for a dynamic and sustainable capital market, with emphasis on ensuring the rights of minority shareholders. SharePHIL is envisioned to advocate educating people, and make them understand the intricacies of investing and how their investment can help finance economic activity and development. It aims to make the investing public become aware of their rights, duties and responsibilities as shareholders of a corporation. An enlightened investing public will be more capable of raising more savings for the capital market, and shareholders, big and small, will be conscious of their promotion and protection.
Indeed, some concerns of minority shareholders are profits being retained in the company and dividends not being declared; profits being used to pay bonuses to directors and top management; some shareholders not being allowed to participate in the management of the company; or the company is diversifying into areas not all shareholders are happy about; or some shareholders not given equal access to company records.
The association will act as a market watchdog that will closely monitor the activities of the market and facilitate full disclosure of material information and improve transparency and fairness. Its overweening objective is to protect minority shareholder rights with a view to strengthening and pushing for good corporate governance.
As well-meaning as the Philippine Code of Corporate Governance is in providing for a sector that at least specifically provides for the rights of minority shareholders, in practice, the individual shareholders are still unable to be heard. Occasionally, they may be found making noise in shareholders’ meetings, but normally they would be outvoted or co-opted by controlling shareholders. Thus, it is important that minority shareholders are provided with clear-cut means to prevent, for example, controlling shareholders from doing self-dealing that ultimately strips them of their rights. Thus, Sharephil, in line with its objective of helping minority shareholders protect their interest, may even mount lawsuits on behalf of its members. Indeed, the association may be described as one that would help to level the playing field among investors.
Basically, as its Articles of Incorporation state, the association aims to promote and protect established minority shareholder rights under existing laws, rules and regulations for dissemination and information of the general public.
Toward this end, it plans to initiate and conduct courses, seminars, workshops, conferences, conventions and other training modules on all matters relating to shareholder rights. Some of these modules would define and establish shareholder rights in accordance with existing laws, rules and regulations for the awareness and information of various stakeholders.
Moreover, it seeks to assist and coordinate with appropriate bodies, such as the ICD, the principles of good corporate governance among business enterprises; recognizing the positive contribution of good corporate governance to influence corporate performance; and, hence, contribute to the international competitiveness of Philippine business, thereby enhancing the growth of the Philippine capital market and the country’s economic growth.
