The Philippine Stock Exchange Inc. said the suspension of trading of the shares of Holcim Philippines Inc. is within the rules of the exchange and that the tax treatment of its tender offer shares strictly legal.
The PSE released a statement over the weekend accusing the cement firm of “finger pointing” on the different tax treatment of shares under its tender offer for all shares owned by the public.
Holcim informed shareholders Friday that the facilitation of tendered shares under the tender offer running between 10 July and 30 August “will have to be effected outside the facilities of the PSE.”
This developed after the PSE denied its request for the lifting of the trade suspension since Holcim’s public float is now below the minimum public ownership of 10 percent.
Holcim in its regulatory filing outlined the PSE’s justification. These include the Bureau of Internal Revenue rule providing that the tax treatment of sales or disposition of shares of stocks of a publicly-listed company non-compliant with the minimum public ownership requirement shall be subject to capital gains tax and documentary stamp tax. It can only be recorded in the books of the company after Holcim has secured a certificate authorizing registration or a tax clearance certificate.
“Shareholders who wish to participate in the tender offer are strongly urged against tendering their shares at the last minute to allow sufficient time to correct any deficiency in their application,” Holcim said.
The PSE suspended trading of Holcim shares in 29 June after its public float fell to 5.05 percent following the sale of Sumitomo Osaka Cement Co Ltd.’s 9.22 percent stake in the company to Holderfin B.V., another majority stockholder.
The transaction resulted to its shares falling below the minimum public ownership requirement of 10 percent.
“Since trading in Holcim shares is presently suspended, the sale of the tendered shares will be subject to CGT and the DST instead of the standard stock transaction tax. This tax treatment is expressly provided for in BIR Regulation No. 16-2012 (RR 16-2012) that requires every sale, barter, exchange or other disposition of shares of stock of a publicly listed company which is non-compliant with the MPO to be subject to CGT and DST. Aside from the applicable tax rate, the shareholders have to facilitate all the documentary requirements, including the relevant tax clearance from the BIR, needed to transfer shares sold outside of the exchange,” the PSE said.
“Holcim now wishes to assign the responsibility of addressing this tax predicament to the exchange by informing shareholders that the matter can only be resolved if the suspension on its shares will be lifted by PSE. The PSE takes strong exception to this ‘finger-pointing’ attempt of the company. The lifting of the suspension is not a discretion or prerogative that can be exercised by PSE. It is a regulation covered and imposed under BIR RR 16-2012.
“The PSE has always upheld and will continue to uphold, not violate, existing laws and regulations,” it said.
The PSE said problems would not have arisen had the parties involved, Holcim and Holderfin, which is also a part of the Holcim group, took into consideration the interest of its public shareholders before implementing the share transaction between Holderfin and Sumitomo.
“They should have thoroughly considered the repercussions of the Holderfin share purchase on its public float before implementing the same,” it said.
“There were several publicly listed companies that have similarly tendered for their shares in the last five years in preparation for their delisting from the exchange. These responsible companies made sure that before executing any transaction or corporate action, they would not breach the MPO and get the trading of their shares suspended. Accordingly, the sale of their tendered shares was done through the facilities of the exchange thereby subjecting the transaction to just the STT, to the best interest of its public shareholders,” the PSE said.
