Holders of ABS-CBN Holdings’ Philippine Deposit Receipts (PDRs) are merely “passive investors” and do not have the right to own and manage the company, said ABS-CBN legal counsel Atty. Cynthia del Castillo at the House panel hearing on the network’s franchise today, June 11.
“PDRs are purely financial instruments. Hindi po ito shares. Hindi po sila nakakaboto sa ABS-CBN Broadcasting at hindi po sila nakakapag-participate sa management ng ABS-CBN,” Del Castillo said.
Del Castillo, a former dean of Ateneo de Manila University School of Law, also explained that ABS-CBN Corporation and ABS-CBN Holdings are two different companies and it is ABS-CBN Holdings that is the one issuing the PDRs.
She said the Securities and Exchange Commission approved the registration of ABS-CBN Holdings’ PDRs and added that ABS-CBN Holdings has complied with all the requirements of the government regulatory agencies in issuing all these securities, as it subjected itself to the full scrutiny, review, and regulation of the SEC and the Philippine Stock Exchange.
“Their acts are all above board. They have relied on the approvals and the permits and licenses issued by the Securities and Exchange Commission and the Philippine Stock Exchange,” she said. “Wala po kaming itinatago. We have not circumvented the Philippine Constitution. All the terms and conditions of the PDRs have been fully disclosed and of course evaluated by the government agencies and the market authority,” she added.
Del Castillo explained that the PDR is a contract between the holder and the issuer, ABS-CBN Holdings, and such contractual arrangement has nothing to do with ABS-CBN Broadcasting.
“The PDRs have a life of its own. They are not attached to the shares of ABS-CBN Broadcasting. They trade independently, and their financial and cash distributions are separately given by ABS-CBN Holdings,” she said.
PDR holders also do not have the power to vote for the board of directors nor do they have the right to manage the company as such is within the control of the board of directors.
ABS-CBN president and CEO Carlo Katigbak, meanwhile, maintained that ABS-CBN Holdings acted in good faith by going to the SEC to secure approval before offering the PDRs to the public in 1999.
“At that time, the SEC agreed that the instrument was legal,” Katigbak said. “But if the SEC or a court of law, or even Congress wishes to disqualify the use of PDRs equally across the entire media industry, then ABS-CBN will be willing to modify, alter, or comply with the order if so directed.”