Giving voice to the minority

published July 4, 2012, page A5, Manila Standard Today

The situation is all too familiar, all too routine: The annual meeting of a company listed at the Philippine Stock Exchange is held at a posh hotel function room. Stockholders big and small, individuals or representatives of institutions, gather in the room with the board of directors and top management giving presentations on what happened in the company in the past 12 months.

Questions are mostly fielded by analysts from brokerage houses and business journalists who must adjust their forecasts and file their reports, respectively. Other questions are addressed only if they are deemed relevant; stockholders who raise uncomfortable questions are regarded as nuisances. Their questions are not answered, much less recognized.

The meeting is adjourned, and the guests enjoy the sumptuous hotel food. It’s all nice and uncomplicated — but very superficial.

In an ideal world, even the small shareholders who invest in the listed companies with their life savings and hard-earned money are also given a voice. They are made to know what really happens in the firm they partly own, they understand corporate/financial jargon, and they are given an opportunity to ask questions about the decisions made.

The result is a much more enlightened investing public and, in time, a broader base of retail investors. This would include ordinary folk who appreciate that placing their money on stocks could give them higher returns than depositing it in banks.

This ideal scenario is what gave rise to the Shareholders Association of the Philippines, or Sharephil, launched last Wednesday at the Dusit Hotel in Makati. The launch was a joint project of the Management Association of the Philippines and the Institute of Corporate Directors.

Sharephil sees itself as the leading institution and catalyst in the protection and promotion of shareholder rights, duties and responsibilities. Its mission is to be a major player in promoting domestic capital market development through advocacy, education and enlightenment of shareholders.

Core values are summed up by the acronym FAITH, which stands for fairness, accountability, independence, transparency and honor. Programs will fall under the banners of education, advocacy, research and shareholder relations and representation.

Jesus Estanislao, chairman of the ICD, said more Filipinos must partake of the “perennial sunshine of optimism” that is sweeping the market these days. There are, at present, only 600,000 shareholders in the country – it would be good to see more. Corporate governance must be presented not just as an issue of compliance, or even corporate social responsibility.

Sharephil chairman Evelyn Singson began her talk with blind items about the questionable behavior of members of the board of some companies. The usual victims, she says, are the minority shareholders. Small investors have been long neglected and there is no shareholder protection mechanism available at all.

Singson emphasized, however, that the manner of engagement would not be to cross swords with the majority shareholders, pitting the small against the big. Partnership is a key word.

Sharephil’s Board of Trustees is composed of the more prominent names in business, all advocates of corporate governance. They are, aside from Singson, Rosario Bernaldo (R.E. Bernaldo and Associates) as president, Celso Vivas (Canadian Chamber of the Philippines) as vice president, Jose Ma. Lim (Metro Pacific Investments Corp.) as treasurer, Rex Drilon II (ICD) as secretary, Romeo David (BNL Management Corp.), Corazon Dela Paz-Bernardo (Banco de Oro), Vicente Dinglasan (Li & Fung Management Ltd.), Evangeline Escobillo (General Institution for Empowerment Corporation), Mario Gatus (DBM Philippines), Mabini Juan (Manila Bankers Life Insurance), Francisco Ed Lim (ACCRALAW), Arturo Macapagal (Toyota Pasong Tamo), Alfred Parungao (Ligaya Management Corp) and Jose Santos (Ateneo de Manila University).


The main speaker during the launch was David Gerald, founder of the SIAS, or the Small Investors Association of Singapore.

In 1999, at the height of the Asian financial crisis, the Malaysian government seized shareholdings of 172,000 Singaporean investors in Malaysian companies. These small investors included taxi drivers, secretaries and people from all walks of life.

Gerald took up the cudgels for these investors even as the Malaysian government initially refused to talk to them and insisted that it would only deal with the government of Singapore. A minister even said: “They (the investors) can go to the moon.”

The investors did not go to the moon, but they got somewhere, eventually. Gerald made the rounds of international media, decrying the injustice, and soon bigger investors threatened to withdraw their placements in Malaysia. Mahathir eventually talked to Gerald and his group.

These days, Gerald says, about 60 percent of his time and effort is spent in going around, educating small investors about their rights and also about the rudiments of business.

Back here at home, there is much to be done to improve the situation of small retail investors. Sharephil believes “minority” would not anymore be synonymous with “silenced.”