Jollibee Foods Corp. clarified that its international business will operate as an entirely separate entity rather than a subsidiary following its planned spin-off, seeking to address investor concerns regarding the governance and liquidity of the new offshore vehicle.

In a media briefing, Jollibee Group Global Chief Financial and Risk Officer Richard Shin said Jollibee Foods Corp. International (JFCI) will be led by its own board of directors and management team.

Shin explained that while the two companies will share a common shareholder base through a proportional distribution of stock, the domestic parent will not exercise control over the international arm.

“Each entity will operate as a fully independent entity post-separation,” Shin said. “They’re not subsidiaries anymore. Each entity will have its own board management team and operating model with clear accountability and decision-making authority.”

However, despite the separation, alignment on shared brand principles will be maintained at the governance level through common controlling shareholders, rather than through shared operations.

Meanwhile, while not disclosing the mechanics of how JFCI international shares will be distributed to JFCI shareholders, Shin assured that they are working on how the shares can be issued and traded by current stockholders.

“That's very, very much part of our work stream that we're working through with our internal teams as well as our external advisors on this spin-off. Very important shareholders are expected to receive shares in the international company on a proportional basis and hold interest in two separately listed entities,” he explained.

He noted that, they will ensure tax, regulatory, and legal requirements related to the distribution and US listing and trading of JFCI shares are complied with.

“Shareholders are expected to hold interest in two separately listed entities. The final mechanics of the distribution and trading arrangements will depend on the approved transaction structure. Distribution and trading will be subject to tax, regulatory and legal requirements,” said Shin. 

In the case of the spin-off by Philippine National Bank of its real estate assets into PNB Holdings Corporation, shareholders had to should the tax payment before they can get their PHC shares and this set the stage for the listing at the Philippine Stock Exchange soon.

The PSE and stock analysts are skeptical about Jollibee’s plan to give shares of its international subsidiary once its overseas businesses has been spun-off since there seems to be no way for local investors to trade the stock when its listed in the US.

“This is what I do not understand. I you’re a Jollibee shareholder, you’re going to get a share in JFC International. But what will you do with that share? How will you sell it?” asked PSE President Ramon S. Monzon.

He noted that the PSE does not have any facilities or platform to allow Philippine shareholders to trade stocks in the US and that there is a different capital gains regime in the US. 

“I think the desire to list in the US is legitimate and a property dividend makes sense. However, you cannot trade stocks listed in any exchange unless you have a strockbrokerage account in that exchange or if the stock exchange you are trading with has an interconnection with another exchange. Even cryto trading, you need an account,” said a local stock market trader for institutional investors.

Chinabank Capital Corporation Managing Director Juan Paolo Colet said earlier that, “The company should find a way to make it easy for recipients of the JFCI shares to hold and trade them in a foreign exchange. 

“This includes helping with the cost-efficient transfer of the initial shares and facilitating the opening of foreign brokerage accounts. They have to make sure that small retail investors in the Philippines are not disadvantaged in the process of listing their JFCI shares.”