MARKET authorities have joined up to look into the case of Abra Mining and Industrial Corp., which the stock market has previously considered to be trading shares above the local stock index.

“The Securities and Exchange Commission (SEC), the Philippine Stock Exchange, Inc. (PSE) and Philippine Depository & Trust Corp. (PDTC) are working closely together to examine the trade in unissued and unlisted shares of Abra Mining and Industrial Corporation (AR) and to take the requisite steps to safeguard investors,” the market regulators said in a joint statement released on Saturday.

The PSE halted the selling of Abra Mining’s stock on Thursday, after it was discovered that the firm violated three laws on the basis of accounts and filings.

The amount of fully paying issued and outstanding shares of the group is above the registered shares of Abra Mining, which is not permitted under the PSE regulations as all fully paid issued and outstanding shares have to be recorded.

Abra Mining has deposited PDTC shares in excess of the issued shares of the firm, where only licensed stocks are to be registered in the trading register.

“In a concurrent provisional fact-finding inquiry, the SEC discovered that AR had 258,96 billion shares registered with PDTC on 16 February 2021. The figure reaches 186.01 billion shares of the 72.95 billion shares that the firm has listed with PSE,” said the regulators.

In their announcement, the regulators said that they had identified further differences.

“In its audited financial statements for 2019, AR announced only the released and outstanding capital stock of 99.29 billion securities,” the market regulators said.

Finally, the firm was found to have sold released and outstanding securities despite not having been listed on the company’s PDTC accounts, in violation of the terms of Republic Act No. 11232 or the Revised Corporation Code (RCC) of the Philippines.

The RCC provides that the securities, particularly though not completely paid for, should be represented in the company’s books.

Stock documents may also be issued by the president or vice-president of the organization to be signed by the secretary or assistant secretary before being sealed by the corporation.

Certificates are given only after the subscription has been received. This already covers debt and, for overdue securities, costs.

Certificates must be sent to the conversion agent in order to lodge securities with PDTC.

Transfer agents serve as an arm to the corporate secretary of the organization and are the only officials that have the power and the duty to certify that all securities of the corporation are qualified for the PDTC and PSE hosting criteria.

The shares shall only be considered fungible and can be used to settle transactions if they are deposited in the central depository.

“Among the conditions, the transfer agent shall issue or register only those securities of the company that are approved for issue and listing by the PSE, and must inform PDTC in due time if the shares delivered are found to be invalid or faulty,” explains the market regulators.

Defective securities are classified as those “which are counterfeit, fake, forged, illegally altered, non-negotiable, subject to an adverse allegation, not exempt from any obligation, obligation, evaluation or fee of any sort, subject to any limitation or ban on transfer through the PDTC scheme.”

However, the market regulators also stated that the transfer agent of Abra Mining had checked and cleared each and every one of its shares specified on the framework.

“The SEC, in cooperation with the PSE and PDTC, will continue to investigate the problem not only to address the current occurrence, but also to identify system-wide steps to deter its recurrence. In the meantime, AR was directed to apply its planned measures to correct the differences in its published, outstanding, listed and registered securities,” said the market regulators.


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