While the Lopez family has declared a ceasefire to resolve their differences privately, a minority shareholder of First Gen Corp. has stepped into the frontline to demand accountability from the firm’s board of directors.

In a May 22 letter addressed to First Gen’s board, minority shareholder Joseph Alvin Tan exercised his shareholder right to be fully informed of the agreements entered into by the company with Prime Infrastructure Capital Inc. (Prime Infra) and BDO Unibank Inc., where controversial “poison pills” were embedded to ensure there is no change in leadership.

He also asked the First Gen board to show that it exercised its fiduciary duty in protecting shareholder interests and whether the deals were subjected to independent review since they have “related-party characteristics.”

Tan said he was referring to the multiple “key man” or “change of control” clauses in the agreements, which impose severe financial penalties on First Gen and the broader Lopez group in the event of the removal or replacement of current Chief Executive Officer (CEO) Federico R. Lopez, who simultaneously serves as Lopez Holdings Corp. CEO.

In the agreements where First Gen invested in Prime Infra’s power generation assets, the Enrique K. Razon Jr.-led firm has the option to buy out First Gen’s equity stakes at a discount of 25 percent, equivalent to about ₱24 billion, should the current CEO be removed from office.

A further “poison pill” is embedded in a standby letter of credit facility of about ₱25 billion arranged with BDO, where a “change of management control” triggers a default under which the lender can demand immediate repayment of all outstanding indebtedness across the wider Lopez group.

“The potential for a cross-default of this scale, triggered by a routine governance decision, represents an extraordinary and, in our view, wholly disproportionate constraint on the rights of shareholders,” said Tan.

He added that, “Taken together, the provisions expose not only First Gen’s assets and balance sheet, but those of its parent First Philippine Holdings Corp. (FPH) and its grandparent Lopez Holdings, to material and potentially cascading financial risk. That risk is, by design, contingent upon the exercise of governance rights—including the right to determine who serves as CEO—that are among the most fundamental rights conferred upon shareholders and boards under Philippine corporation law.”

Tan said the structure of the poison pill provisions is “highly irregular” since, in ordinary commercial practice, a change-of-control clause operates to protect a counterparty’s legitimate commercial interest—typically through a premium, not a discount.

“A provision that imposes a substantial financial penalty upon a public company specifically in the event of a change in its own management, triggered for the benefit of a third-party buyer, is fundamentally different in character.

“Rather than protecting First Gen and its shareholders, the provision appears to operate as a mechanism that entrenches the incumbent CEO, constrains the free exercise of shareholder and board rights across the entire Lopez group, and exposes corporate assets to impairment as a direct consequence of a governance decision that shareholders and the board are statutorily entitled to make,” he added.

In this light, Tan asked First Gen’s board to provide copies of the complete minutes of all board and committee meetings at which the transaction with Prime Infra—including the leadership change provision—was presented, deliberated upon, or approved, together with any board papers, fairness opinions, legal memoranda, or other materials placed before the board in connection with it.

“We make this request in our capacity as a shareholder exercising rights that are recognized and protected under the Revised Corporation Code (RCC) of the Philippines,” he said.

Tan noted that, “We wish to be unambiguous: our objective at this stage is simply to exercise our lawful right to be informed. We remain open to engaging constructively with the board and management should they wish to provide context or clarification in advance of or alongside the requested documentation.”

He warned, however, that “should our request not be met within the timeframe stated, we will have no alternative but to consider all remedies available to us under applicable law and regulation.”