Philippines court judgment to slow foreign investment

Author: | Published: 20 Jul 2011

A Supreme Court of the Philippines judgment could radically slow down foreign investment into the country.

A June 28 judicial decision on the sale of shares in Philippine Long Distance Telephone Company (PLDT) to foreign entities led to a revised definition of capital as applied under Sector 11, Article XII of the 1987 Philippines’ constitution.

This meant a 40% cap on foreign ownership in regulated sectors, such as public utilities, private land ownership and mining would apply only to voting or common shares and not, as previously interpreted, to non-voting shares.

The move would significantly shrink the pool of shares to which the 40% calculation is made, and, therefore, bring a number of foreign investors now holding more than 40% in breach of restrictions. This could translate into a violation of the so-called Anti-Dummy Law and thus to criminal prosecution and confiscation.

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