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San Miguel to bring SEC to court over P770-million penalty

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SAN MIGUEL Corp. said it will bring the Securities and Exchange Commission (SEC) to court over the P769.3-million fine slapped on the conglomerate, saying the amount is “excessive and unreasonable.”

SMC was referring the SEC en banc’s Nov. 21 decision imposing the massive penalty for the company’s late filing of additional documents on its acquisition of a stake in Manila Electronic Co. (Meralco) in 2012.

“Good governance is an integral part of how we do business and we are committed to operating with the highest standards of ethical behavior. With the SEC’s decision, we will be constrained to seek relief from the court. Hopefully, the court will understand and appreciate the position of the company,” SMC President and Chief Operating Officer Ramon S. Ang said in a statement.

The SEC alleged the diversified conglomerate failed to file SEC Form 23-A, or the Initial Statement of Beneficial Ownership of Securities, as well as SEC Form 23-B, or the Statement of Changes in Beneficial Ownership of Securities, in a timely manner.

As per the Securities Regulation Code, both forms must be filed within 10 days after a  company becomes a beneficial owner. SMC’s filing of Form 23-A, however came 191 days late, while Form 23-B was submitted 165 days past the deadline, as stated in SEC’s decision.

However, Mr. Ang noted the company disclosed the details of the transaction through SEC form 17-C, which is used for current reports and required to be filed within five days of the transaction. He added this disclosure had allowed investors enough time to digest the impact of the transaction on SMC.

“SMC committed no violation since all the transactions were disclosed in a timely manner to the PSE and to the SEC through letters and through SEC Form 17-C. However, the SEC disregarded our timely reports and imposed the onerous penalty and computed it based on a percentage of the value of the transaction,” Mr. Ang said.

He added that SMC’s communication with the SEC and the Philippine Stock Exchange (PSE) through letters and SEC Form 17-C indicated that the conglomerate had no intention to withhold information from the public and regulatory bodies regarding the Meralco transaction.

Further, SMC called out the corporate regulator for the size of the P769.3-million fine, which is the highest penalty the SEC has imposed in recent history.

“The penalty is highly disproportionate to the infraction attributed to the company considering that the disclosures made by SMC to both SEC and PSE were extensive enough to prevent market speculation and other similar fraudulent acts,” Mr. Ang said.

The computation for the fine was based on 1% of the amount of the transaction, plus an additional P100 for each day that the filing was delayed for Form 23-A. Penalties for Form 23-B is 2% of the transaction size added with P200 for every day the company delays the disclosure.

Shares in SMC were up by 30 centavos or 0.27% to close at P111.80 apiece on Wednesday, a day after news of the SEC’s penalty against the company broke. — Arra B. Francia

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