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
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
Clifford Chance’s litigation and dispute