ABS-CBN did not violate its regulations when it issued PDRs

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Media giant ABS-CBN Holdings Corp did not violate its regulations when it issued Philippine Deposit Receipts (PDRs), the Securities and Exchange Commission (SEC) said on Thursday.

ABS-CBN is now under scrutiny as the network seeks congressional approval for a new operating franchise.

SEC Commissioner Ephyro Luis Amatong  said the question on whether the sale of these financial instruments to foreigners violates the rule on 100-percent Filipino ownership in mass media is still up for the Supreme Court to decide.

“As far as we are concerned… wala pa kaming basehan para sabihin na nag-violate sila ng regulations namin (As far as we are concerned… we don’t have any basis yet to say that they violated our regulations.),” Amatong said during a joint congressional committee.

“We are not aware of any violation. No complaint has been filed with us,” said Amatong.

Amatong said the SEC has not received any report that ABS-CBN violated the law by allowing a foreign holder of its PDR to convert it into common shares.

ABS-CBN President and CEO Carlo Katigbak said the company was willing to “modify or alter” its PDRs should government disqualify these financial instruments “equally across the entire media industry.”

“We acted in good faith by going to the SEC to secure approval before offering it to the public, and at the time, the SEC agreed that the instrument was legal,” he said.

Solicitor General Jose Calida earlier cited ABS-CBN’s alleged PDR violation in its Supreme Court petition to revoke its previous 25-year broadcast franchise.

The National Telecommunications Commission (NTC) had ordered the shut down of ABS-CBN on May 5, the day after the franchise expired despite a pending application for a new one, which had been pending in Congress since 2014.

Scrutiny of PDRs issued by ABS-CBN Holdings Corp over alleged constitutional violation has raised concern that it may also hit other broadcast companies, which sold similar investment instruments.

Amatong said ABS-CBN and GMA-7 PDRs appeared to be almost “word for word.”

Asked if ABS-CBN was acting in good faith when its holding company offered PDRs following existing regulations, he replied: “I would say both ABS-CBN and GMA-7.”

Rep. Jose Sy-Alvarado, chair of the House Committee on Public Accountability, said other broadcast companies which issued PDRs should also be scrutinized for possible violations.

In a statement, GMA said: “GMA Network maintains the legality of its issuance of Philippine Depositary Receipts or PDRs, and that this was done in compliance with the regulations of the Securities and Exchange Commission and of the Philippine Stock Exchange.”

“The Network will fully comply and submit the necessary documents as requested in the House of Representatives’ committee hearing held today, June 11, 2020,” GMA also said./Stacy Ang

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