SEC called upon to revive planned cross ownership ban

In Manila, a powerful group of fund managers is urging the Securities and Exchange Commission (SEC) to implement a proposal that would tighten cross-ownership rules among listed companies and protect minority stockholders.

The proposal, which was released as a draft memorandum circular two years ago, aims to prohibit subsidiaries from buying voting shares of their parent companies. However, it has yet to be approved.

The Fund Managers Association of the Philippines and MBG Investment Management Inc. have penned a joint letter to the SEC, calling for the speedy implementation of the new regulation.

According to the letter, cross-shareholdings between parent and subsidiary companies provide a platform for major shareholders to exercise control over companies, potentially resulting in self-serving decisions that do not align with the interests of minority shareholders.

The letter also highlights the lack of transparency caused by the complex structure of shareholdings between parent companies and their subsidiaries, which obscures true ownership and control.

The practice of corporate layering, common in Asia (excluding India), has been a cause for concern, as it can reinforce the status quo and hinder management and business model changes, according to a report released by the Organization for Economic Cooperation and Development (OECD) in 2022.



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