Majority shareholders of Professional Services Inc. appealed the penalty imposed by the special hearing panel of the Securities and Exchange Commission against them for violation of several securities law when they took over the operating company company of The Medical City.
An informed source from the SEC said Viva Healthcare Ltd. and Viva Holdings (Philippines) Pre. Ltd. a filed motion for reconsideration with the corporate regulator after they were fined P50.25 million for violating the Securities Regulation Code (SRC).
The SEC source said respondents had the option to file a motion for reconsideration with the special hearing panel or appeal their case to the SEC en banc.
The SEC formed an SHP after several shareholders, including PSI chief executive officer Alfredo Bengzon, questioned the acquisition of the company’s majority shares by corporations related to his nephew, Jose Xavier Gonzales.
While the penalty might be just a small amount, the SEC source said the Bengzon’s group could use the SHP’s decision to strengthen the other legal cases filed against Gonzales.
The special hearing panel said respondents acquired majority of PSI shares through omission of material facts, which misled the board of directors and other shareholders to approve increases in the company’s capital stock and allow them to increase their shareholdings.
The respondents aimed to acquire 35 percent or more of the equity shares in PSI as early as 2013, but the SHP said the plan to acquire majority of the shares in PSI was not communicated or could not be inferred during the board meetings, where increases in the company’s capital stock were discussed and approved.
The SHP found Viva Healthcare, Viva Holdings, FAI and Fountel to have “adroitly circumvented” the prevailing rules at the time to avoid the requirements of a mandatory tender offer.
The SHP said the respondents conveniently structured their acquisition to ensure that the mandatory tender offer would not apply.
However, the SHP stressed SRC Rule 19.3.B that requires any person or group of persons acting in concert, who intend to acquire 35 percent or more of a public company’s equity shares, to disclose such intention.