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THE
Philippine Stock Exchange (PSE) is studying plans to
inject new provisions in the Code of Corporate
Governance, specifically the inclusion of a mandatory
dividend policy.
President and chief executive Francis Lim noted that
dividend declaration, whether stock or cash, is a
primary concern of shareholders and issues concerning it
would clearly be defined.
“There
are things we can do without legislation. This includes
the mandatory dividend policy. I think even without
going back to Congress, we could put it as part of the
Code of Corporate Governance,” he said.
The
code, which was established in 2002, is currently being
reviewed by the Securities and Exchange Commission
(SEC).
However,
Lim was quick to point out that several issues must be
considered before the implementation of the proposed
mandatory dividend declaration.
“First,
the company must have earnings. Second, the earnings
must be unrestricted; meaning it is not appropriated for
any specific corporate purpose. You can’t force
companies to declare dividends if they don’t have
earnings, otherwise their capital will be jeopardized,”
he explained.
Another
issue is will it be required on all companies or only
for public companies, Lim added.
“There
are different kinds of public companies. A listed
company is only one of the several public companies. You
know, of course, that a public company is governed by
the Securities Regulation Code and the Code of Corporate
Governance in addition to Corporation Code Law. The Code
of Corporate Governance may offer the opportunity to
implement mandatory dividend declaration,” he said.
Lim said
the extent of the dividend policy and the frequency of
the declaration are important concerns.
“There
should be discussions if whether the new rule requires a
minimum percentage or should all companies have a
mandatory dividend policy but leave the percentage to
the company involved? Or it can be that the dividend
policy be mandatory but not the rate of the dividend.
These should be subjects for discussion,” he explained.
He also
pointed to the possibility of revisiting the Corporation
Code to widen on shareholder inspection and related
party transactions.
Shareholder inspection is the right given to a
stockholder to inspect the company’s books like
financial statements.
Lim
hopes to present these proposals to the SEC before the
end of the year. |
