"x x x.
On 20 May 2013, after more than six months of public hearings and study, the Securities and Exchange Commission issued a memorandum (SEC Memo No. 8-2013). It provides that the required percentage of Filipino ownership shall be applied to both (a) the total number of outstanding shares of stock entitled to vote in the election of directors; and, (b) the total number of outstanding shares of stocks, whether or not entitled to vote in the election of directors.
Note that, rather than merely complying with the dispositive portion of the Gamboa decisions which it could have chosen to do, the SEC added a second layer of safeguard to ensure compliance with the ownership requirements.
Letter (b) of Section 2 of SEC Memo No. 8-2013 is a bold but intelligent and practical interpretation of the Supreme Court’s pronouncement in Gamboa in the 8 October 2012 resolution.
In keeping with the spirit of Gamboa, the SEC is effectively saying that the ownership restriction must also affect the non-voting preferred shares as they, even if denied the right to vote in the election of directors, are entitled to vote on certain fundamental corporate matters, such as: amendment of articles of incorporation; increase and decrease of capital stock; incurring, creating or increasing bonded indebtedness; sale, lease, mortgage or other disposition of substantially all corporate assets; investment of funds in another business or corporation or for a purpose other than that which the corporation was organized; adoption, amendment or repeal of by-laws; merger and consolidation; and, dissolution of corporation.
x x x."
