SEC affirms Calata delisting, perpetual ban on Joseph Calata
Published Jan 21, 2019 12:00 am
By James A. Loyola
The SEC Commission En Banc has affirmed the Philippine Stock Exchange’s (PSE) Decision ordering the delisting of agri-business firm Calata Corporation and barring its directors and officers from any listed company to due to non-disclosure of trades by its chairman who acted on inside information.
The PSE had issued an order for the perpetual disqualification from being an officer, member of the Board of Directors of an issuer of Calata Corpodation’s Chairman, CEO and President Joseph H. Calata.
It also ordered the disqualification from becoming directors or executive officers of an issuer of Atty. Jose Marie E. Fabella, Halmond Parker R. Ong, Melvin H. Calata, Johnny L. Uy, Edmund M. Solilapsi, and Fr. Conrado C. Zablan.
The PSE held Calata Corporation liable for multiple violations of PSE Disclosure Rules and Delisting Rules.
Calata Corporation was found to have committed 29 distinct violations of Section 13.1 of the PSE Disclosure Rules when it failed to timely disclose changes in the shareholdings of its Directors and Principal Officers.
Under Section 13.1 (c), Directors and Principal Officers of a listed company must disclose to the PSE any “acquisition, disposal, or change” in their shareholdings within five trading days.
The PSE found Joseph H. Calata, to have made multiple trades of Calata shares between November 29, 2016 and March 16, 2017 but the corporation only disclosed its first set of undisclosed transactions on June 23, 2017.
Calata also made multiple trades of Calata Corp. shares from April 20, 2017 to June 20, 2017 but the corporation only disclosed this second set of undisclosed transactions on July 7, 2017.
Further, Calata Corp. committed 26 violations of the Blackout Rule, i.e. Section 13.2 of the PSE Disclosure Rules, within two (2) Blackout Periods when its Directors and Principal Officers executed trades of Calata shares during a “Blackout Period” where only they were in possession of material non-public information.
Under Section 13.2 of the PSE Disclosure Rules, “A Director or Principal Officer of an Issuer must not deal in the Issuer’s securities during the period within which a material non-public information is obtained and up to two (2) full Trading Days after the price sensitive information is disclosed.”
It was noted in the SEC Commission En Banc Decision that Joseph H. Calata 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.
Further in the SEC Commission En Banc decision, the delisting of Calata Corporation was held valid as it also declared that the PSE correctly imposed perpetual disqualifications upon Joseph H. Calata and other officers.
The SEC Commission En Banc Decision also stated that “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.”
The PSE’s order, however, for Calata to submit a tender offer or buy back plan for the latter to buy-back any and all shares tendered by its shareholders was found by the SEC Commission En Banc untenable considering that Calata Corporation does not have sufficient unrestricted retained earnings to buy back all the outstanding shares.
The PSE had issued an order for the perpetual disqualification from being an officer, member of the Board of Directors of an issuer of Calata Corpodation’s Chairman, CEO and President Joseph H. Calata.
It also ordered the disqualification from becoming directors or executive officers of an issuer of Atty. Jose Marie E. Fabella, Halmond Parker R. Ong, Melvin H. Calata, Johnny L. Uy, Edmund M. Solilapsi, and Fr. Conrado C. Zablan.
The PSE held Calata Corporation liable for multiple violations of PSE Disclosure Rules and Delisting Rules.
Calata Corporation was found to have committed 29 distinct violations of Section 13.1 of the PSE Disclosure Rules when it failed to timely disclose changes in the shareholdings of its Directors and Principal Officers.
Under Section 13.1 (c), Directors and Principal Officers of a listed company must disclose to the PSE any “acquisition, disposal, or change” in their shareholdings within five trading days.
The PSE found Joseph H. Calata, to have made multiple trades of Calata shares between November 29, 2016 and March 16, 2017 but the corporation only disclosed its first set of undisclosed transactions on June 23, 2017.
Calata also made multiple trades of Calata Corp. shares from April 20, 2017 to June 20, 2017 but the corporation only disclosed this second set of undisclosed transactions on July 7, 2017.
Further, Calata Corp. committed 26 violations of the Blackout Rule, i.e. Section 13.2 of the PSE Disclosure Rules, within two (2) Blackout Periods when its Directors and Principal Officers executed trades of Calata shares during a “Blackout Period” where only they were in possession of material non-public information.
Under Section 13.2 of the PSE Disclosure Rules, “A Director or Principal Officer of an Issuer must not deal in the Issuer’s securities during the period within which a material non-public information is obtained and up to two (2) full Trading Days after the price sensitive information is disclosed.”
It was noted in the SEC Commission En Banc Decision that Joseph H. Calata 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.
Further in the SEC Commission En Banc decision, the delisting of Calata Corporation was held valid as it also declared that the PSE correctly imposed perpetual disqualifications upon Joseph H. Calata and other officers.
The SEC Commission En Banc Decision also stated that “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.”
The PSE’s order, however, for Calata to submit a tender offer or buy back plan for the latter to buy-back any and all shares tendered by its shareholders was found by the SEC Commission En Banc untenable considering that Calata Corporation does not have sufficient unrestricted retained earnings to buy back all the outstanding shares.