EDC PR 2016 (FS section)
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19. Equity<br />
Capital Stock<br />
As required under the Philippine Constitution, the Parent Company is subject to the nationality<br />
requirement that at least 60% of its capital stock must be owned by Filipino citizens since it is<br />
engaged in the exploration and exploitation of the country’s energy resources. The Parent<br />
Company is compliant with the said nationality requirement as of December 31, <strong>2016</strong> and 2015.<br />
Beginning December 13, 2006, the 6.0 billion common shares of <strong>EDC</strong> were listed and traded on<br />
the PSE at an initial public offering price of ₱3.2 per share.<br />
On May 19, 2009, the BOD approved an increase in <strong>EDC</strong>’s authorized capital stock from<br />
₱15.1 billion comprising of 15.0 billion common shares with a par value of ₱1.00 per share or<br />
aggregate par value of ₱15.0 billion, and 7.5 billion preferred shares with a par value of ₱0.01 per<br />
share or aggregate par value of ₱75.0 million to ₱30.1 billion divided into 30.0 billion common<br />
shares with a par value of ₱1.00 per share or aggregate par value of ₱30.0 billion, and 15.0 billion<br />
preferred shares with a par value of ₱0.01 per share or aggregate par value of ₱150.0 million. The<br />
increase in authorized capital stock of the common shares was effected by way of a 25% stock<br />
dividend, to be taken from <strong>EDC</strong>’s unrestricted retained earnings as of December 31, 2008.<br />
As of December 31, <strong>2016</strong> and 2015, the common shares are majority held by Filipino citizens,<br />
with Red Vulcan holding 7.5 billion shares or an equivalent of 40% interest.<br />
The ownership of the Parent Company’s preferred shares is limited to Filipino citizens. The<br />
preferred shares have voting rights and subject to 8% cumulative dividends (see Note 29). Red<br />
Vulcan holds the entire 9.4 billion outstanding preferred shares equivalent to 20% voting interest<br />
in <strong>EDC</strong>. The combined interest of Red Vulcan entitles it to 60% voting interest and 40%<br />
economic interest in <strong>EDC</strong>.<br />
On February 28, 2014, the BOD approved the reclassification of <strong>EDC</strong>’s 3.0 billion common shares<br />
with a par value of ₱1.00 per share or aggregate par value of ₱3.0 billion out of the unissued<br />
authorized common stock to 300.0 million non-voting preferred shares with a par value of ₱10.00<br />
per share or aggregate par value of ₱3.0 billion thereby creating a new class of preferred shares.<br />
Among others, the new class of non-voting preferred shares has the following features:<br />
i.<br />
ii.<br />
iii.<br />
iv.<br />
v.<br />
Non-voting except in the cases provided by law;<br />
Entitled to receive out of the unrestricted retained earnings of <strong>EDC</strong>, when and as declared by<br />
the BOD, cumulative dividends at the rate to be determined by the BOD at the time of<br />
issuance, before any dividends shall be set apart and paid to holders of the common shares,<br />
and shall not be entitled to participate with holders of the common shares in any further<br />
dividends payable;<br />
Assignable;<br />
The Parent Company may redeem the non-voting preferred shares at its option in accordance<br />
with their terms, and once redeemed, shall revert to treasury and may be reissued or resold by<br />
the Parent Company;<br />
In the event of any dissolution or liquidation or winding up, whether voluntary or involuntary,<br />
of the Parent Company, except in connection with a merger or consolidation, shall be entitled<br />
to be paid up to their issue value plus any accrued and unpaid dividends thereon before any<br />
244<br />
I Energy Development Corporation Performance Report <strong>2016</strong>