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SEC upholds Calata delisting

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By Arra B. Francia, Reporter

THE country’s corporate regulator has upheld the Philippine Stock Exchange’s (PSE) decision to remove agribusiness firm Calata Corp. from the local bourse, due to violations of trading and disclosure rules.

In a statement issued Monday, the Securities and Exchange Commission (SEC) en banc affirmed the PSE’s decision on Nov. 3, 2017 that delisted Calata and imposed a perpetual ban on its Chairman, Chief Executive Officer, and President Joseph H. Calata from being a director of any listed company.

Officers of the agribusiness company, namely Jose Marie E. Fabella, Halmond Parker R. Ong, Melvin H. Calata, Johnny L. Uy, Edmund M. Solilapsi, and Conrado C. Zablan, will also be disqualified from becoming directors and/or executive officers of a listed firm for a period of five years following the delisting procedures.

“The other directors, although they neither illicitly-traded nor failed to disclose, may also be held liable because they bound themselves to ensure that Calata would not commit any violation of the PSE Disclosure Rules. This duty is echoed in the Listing Agreement between Calata and PSE,” according to SEC’s decision.

Sought for comment, Mr. Calata questioned the SEC’s decision and its capacity to protect the investing public.




“If SEC thinks that the public, which owns the majority share, should be punished by the alleged act of one, is it in tune with its vision that SEC is the champion of investor protection?” Mr. Calata said in a text message.

The PSE ordered the delisting of Calata back in 2017 due to its repeated violations of PSE Disclosure Rules and Delisting Rules. The bourse counted 29 distinct violations of Section 13.1 of the PSE Disclosure Rules due to the company’s failure to disclose changes in the shareholdings of its directors and principal officers.

Item C, Section 13.1 of the PSE Disclosure Rules states that directors and principal officers of a listed firm must disclose any “acquisition, disposal, or change” in their shareholdings to the PSE within five trading days.

Calata was also found to have committed 26 violations of Section 13.2 of the same rules, otherwise known as the Blackout Rule. This means that its officers or directors traded shares in Calata during a blackout period, where only they were aware of material information that may affect the firm.

Under PSE rules, company officials are not allowed to execute trades of shares in their own company up to two full trading days after the price sensitive information is disclosed.

Mr. Calata was also found to have delayed the disclosure of multiple trades of Calata shares from November 2016 to March 2017 and from April to June 2017. The first set of trades was disclosed on June 23, 2017, way beyond the required five trading days, while the second set was disclosed only on July 27, 2017.

The SEC noted that Mr. Calata himself “consistently admitted that trades were executed while they were in possession of material non-public information and that there was a failure to disclose the same to the PSE.”

Meanwhile, the SEC ruled that the PSE cannot compel the company to buy back the Calata shares held by the public, given that it does not have enough unrestricted retained earnings to conduct a tender offer.