Corporate regulators probing Abra Mining

Iris Gonzales (The Philippine Star ) - March 8, 2021 - 12:00am
https://www.philstar.com/business/2021/03/08/2082680/corporate-regulators-probing-abra-mining

MANILA, Philippines — Corporate regulators are scrutinizing the trading of unissued and unlisted shares of Abra Mining & Industrial Corp.

The Securities and Exchange Commission (SEC), the Philippine Stock Exchange Inc. (PSE) and Philippine Depository & Trust Corp. (PDTC) are working closely to pursue the necessary actions to protect investors.

In its preliminary fact-finding investigation, the SEC found that Abra Mining had 258.9 billion shares lodged with PDTC as of Feb. 16.

This is higher than the 72.9 billion shares the company has listed with PSE.

In its 2019 audited financial statements, Abra Mining only reported an issued and outstanding capital stock comprising 99.3 billion shares, the SEC said.

The SEC has ordered Abra Mining to submit its proposed actions to address the discrepancies in its issued, outstanding listed and lodged shares.

According to Section 173 of the Revised Corporation Code of the Philippines, outstanding capital stock comprises “the total shares of stock issued under binding subscription contracts to subscribers or stockholders, whether fully or partially paid, except treasury shares.”

Thus, even shares which have not been fully paid are considered issued and must be reflected in the company’s books.

Section 63 of the Code, however, provides that “no certificate of stock shall be issued to a subscriber until the full amount of the subscription, together with interest and expenses (in case of delinquent shares), if any is due, has been paid.”

The certificate should be signed by the president or vice president, countersigned by the secretary or assistant secretary, and sealed with the seal of the corporation.

“In order to lodge securities with PDTC, the certificates covering the securities must be delivered to the transfer agent. Once lodged in the central depository, the securities are deemed fungible and may be used for settlement of exchange trades,” the SEC said in a statement.

Each share must meet PDTC’s and the PSE’s respective requirements for lodgment and the transfer agent, as an extension of the corporate secretary of the corporation, has the sole authority and duty to certify this.

The transfer agent must also issue or register only those securities of the corporation that are authorized for issuance and listing by the PSE and must timely notify PDTC if the shares delivered are found not valid or defective.

Defective securities are those which are counterfeit, invalid, forged, improperly altered, non-negotiable, subject to an adverse claim, not free from any liens, encumbrances and assessments or charges of any kind.

Records showed that each and every Abra Mining share that had entered the system was confirmed and cleared by the transfer agent for lodgment.

The SEC, PSE and PDTC will apprise the public of any developments on the matter.

Abra Mining corporate information officer Joel Beloy said the company is “fully cooperating with the Philippine Stock Exchange and the government’s regulatory bodies in order to lift the suspension for trading after it is able to submit its compliance with the requirements and documents that the exchange has asked for.

“Amidst these difficult times, the company is seriously addressing these concerns to protect its shareholders and investors’ confidence in the market,” Beloy said.