This honorable commission is a highly specialized

This Honorable Commission is a highly specialized body
created for the purpose of administering, overseeing, and
managing the corporate industry, share investment and
securities market in the Philippines. By the very nature of
its functions, it dedicated to the study and administration
of the corporate and securities laws and has necessarily
developed an expertise on the subject. Based on said
functions, the Honorable Commission is necessarily tasked
to issue rulings with respect to matters involving corporate
matters and share acquisitions. Verily when this Honorable
Commission rendered the Ruling that ” … the acquisition of
Cemco Holdings of the majority shares of Union Cement
Holdings, Inc., a substantial stockholder of a listed
company, Union Cement Corporation, is not covered by the
mandatory tender offer requirement of the SRC Rule 19,” it
was well within its powers and expertise to do so. Such
ruling shall be respected, unless there has been an abuse
or improvident exercise of authority.
2. Tender offer is a publicly announced intention by a
person acting alone or in concert with other persons to
acquire equity securities of a public company. A public
company is defined as a corporation which is listed on an
exchange, or a corporation with assets exceeding
₱50,000,000.00 and with 200 or more stockholders, at
least 200 of them holding not less than 100 shares of such
company. Stated differently, a tender offer is an offer by
the acquiring person to stockholders of a public company
for them to tender their shares therein on the terms
specified in the offer. Tender offer is in place to protect
minority shareholders against any scheme that dilutes the
share value of their investments. It gives the minority
shareholders the chance to exit the company under
reasonable terms, giving them the opportunity to sell their
shares at the same price as those of the majority
shareholders.
The SEC and the Court of Appeals accurately pointed out
that the coverage of the mandatory tender offer rule
covers not only direct acquisition but also indirect
acquisition or “any type of acquisition.” The legislative
intent of Section 19 of the Code is to regulate activities
relating to acquisition of control of the listed company and
for the purpose of protecting the minority stockholders of a
listed corporation. Whatever may be the method by which
control of a public company is obtained, either through the
direct purchase of its stocks or through an indirect means,
mandatory tender offer applies.
B.15. – SECURITIES REGULATION CODE
Mr. P, the President of JKL, Inc. which shares are
listed in the Philippine Stock Exchange, was
notified that the corporation has just been
awarded a ₱ 5,000,000,000.00 construction
contract by a reputable private company. Before
this information could be disclosed to the public,
Mr. P called his stockbroker to purchase 20,000
shares of JKL, Inc. He also mentioned the
transaction to his brother, Mr. B. Mr. B, who was
not involved at all in the business of JKL, Inc., also
bought 50,000 shares of JKL, Inc. because of the
tip disclosed to him by Mr. P.