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Lopez family retains control of Meralco after 13-hour meeting

May 27, 2008 12:22pm

Tags: Meralco
SEC’s cease and desist order

1. Let an ex-parte Cease and Desist Order issue —
  • restraining respondent Anthony Rosete, assistant corporate secretary of MERALCO, or any person acting on his behalf or in his stead, or any successor of the present Corporate Secretary, or any person performing the functions of Corporate Secretary in connection with the stockholders’ meeting set on May 27, 2008 or any adjournment thereof, from recognizing, counting, or tabulating, directly or indirectly, notionally or actually, in whatever way, form, manner or means, or otherwise honoring the proxies in favor Manuel Lopez, Felipe Alfonso, Jesus Francisco, Christian Monsod, Elpidio Ibañaez, Francisco Giles-Puno or any officer representing MERALCO Management, that have in any way been challenged, protested or objected to at the validation proceedings, during the stockholders’ meeting on May 27, 2008, or any adjournment thereof;

  • restraining respondents Lopez, Alfonso, Francisco, Mondod, Ibañez and Giles-Puno from voting said challenged, protested or objected to, shares solicited by MERALCO management; and

  • restraining respondent Rosete from committing any act that would render ineffective the proxies duly issued in favor of the GSIS, in particular those of the other government agencies all of which were submitted in conformity with Commission rules;
2. And to recognize and tabulate, honor and count, all other proxies;

3. Directing Director Hubert Guevara of the Compliance and Enforcement Department of the Commission and two of his qualified lawyers, as the SEC representatives to supervise the stockholders’ meeting with full powers and authority to ensure the holding of a credible, transparent and peaceful election of directors on the date stipulated above.

MANILA, Philippines - The Lopez family retained control of the Manila Electric Co. after its stockholders awarded five board seats to its representatives and only four seats to the representatives of the government.

It took independent auditor SGV and Co. seven hours to come out with the results of the voting. All in all, Meralco stockholders' meeting dragged on for more than 13 hours, the longest stockholders' meeting in Philippine corporate history.

The elected representatives of the Lopez family in the Meralco board are Manuel M. Lopez, Jesus P. Francisco, Christian S. Monsod, Felipe B. Alfonso, and Cesar PA Virata.

The representatives of the government to the Meralco board are Winston F. Garcia, Daisy P. Arce, Bernardino R. Abes, and Jeremy Z. Parulan.

The Lopez family victory might be temporary after the Government Service Insurance System (GSIS) said it would question the validity of proxies that were voted for the Lopez representatives.

"We will definitely be filing more cases. We will still contest the validity of this meeting," said Estrella Elamparo, GSIS legal counsel.

The Meralco board on Tuesday proceeded with the company's stockholders' meeting, defying a cease and desist order issued by the Securities and Exchange Commission (SEC).

In a statement read during the meeting, majority of existing members of the Meralco board said they decided to proceed with the stockholders' meeting about 11:30 a.m., saying the authenticity of the SEC injunction order is questionable.

The statement was read by Meralco Assistant Corporate Secretary Anthony Rosete.

The Meralco board noted that the injunction order was numbered, did not bear SEC's seal, was undated and was signed by only one SEC commissioner who had no authority to represent other members of the commission.

The board also noted that due process was not observed in the issuance of the injunction order, saying the order was released without the conduct of a committee hearing and that no complaint was lodged with the SEC compliance division.

Meralco said it was not been served notice beforehand.

The Board also questioned SEC's intervention, saying the commission had ceded jurisdiction over the settlement of intra-corporate disputes to the courts. It noted that GSIS had already filed a similar charge before the Pasay City regional trial court.

GSIS president and general manager Winston Garcia and another government representative in the Meralco Board opposed the decision to resume the stockholders' meeting.

Hubert Guevara, director of SEC's compliance and enforcement division, said the SEC order was not meant to stop Meralco's stockholders' meeting, but rather to make sure that the voting is carried out in a transparent manner.

Guevara said the Meralco board's decision to proceed with the stockholders' meeting remains subject to the SEC's action.

"We're not here to stop the annual meeting of stockholders but to ensure that the voting is transparent. Proceed if you want, but this will be subject to whatever actions as may be decided by the commission later on," Guevara said.

Earlier in the day, SEC served an injunction order preventing proxies of Meralco from being voted on the board. The injunction order also allowed SEC to take over the stockholders' meeting proceedings.

The issuance of the SEC order, signed by commissioner and officer-in-charge Jesus Enrique G. Martinez, prompted members of the Meralco Board to declare a recess. - Patricia de Leon, GMANews.TV

Tags: Meralco