Securities administration – Philippines
Income collection
PDTC acts as the central paying agent for dividend income. Cash dividends are forwarded to participants accounts via PDTC disbursement banks (the SCCP settlement banks). PDTC only credits participant accounts once it has received cleared funds from the issuer. The PSE provides a list of unclaimed dividends on its website.
For corporate bonds, PDTC also acts as the paying agent for securities listed in PDEX.
For government securities, the Bureau of the Treasury is the central paying agent.
Dividends are paid net of withholding tax on a quarterly, half-yearly or annual basis. The payment date shall not be more than 18 trading days from the record date. PDTC only credits participants' accounts at the settlement bank once it has received good value on the issuer's funds for the cash dividend. Scripless shares are credited into PDTC participants' accounts while for shares that have not been lodged into PDTC, investors receive their dividend by cheque directly from the company.
For fixed income securities, interest is usually paid quarterly or half-yearly. Interest payments for government securities are credited to the Direct Depository Agent accounts of the authorised dealer with BSP and for corporate bonds, to the underwriters – this occurs because government and corporate debt securities are registered in the name of the primary market participants. The authorised dealers and underwriters pay the investors via RTGS.
Dividends
| Market Record date | Date on which the investor must be recognised/registered in order to receive entitlements and other benefits or to vote on company's affairs. |
| Ex-date | 30 to 45 calendar days after announcement date. The international standard of RD-1 is adopted by the Philippine market under T+2 settlement cycle. |
| Basis for entitlement | Entitlement is determined by reference to trade date versus ex-date. For receipt trades, the trade date must be before ex-date. For delivery trades, the trade date must be on or after ex-date. |
| Standard interest calculation rule | Dividend Rate * Entitled shares minus 25% withholding tax |
Interest
| Market Record date | Not applicable. |
| Ex-date | Not applicable. |
| Basis for entitlement | The interest shall be paid to the holder of the instrument as of the scheduled interest payment date. |
| Standard interest calculation rule | For government securities, interest is computed as Principal * Rate * Time. Computation uses 180/360 or 90/360. Interest is paid net of 20% withholding tax deducted at source. For corporate bonds, interest is computed as Principal * Rate * Time. Computation used is normally 180/360 but this is also dependent on the prospectus of the issuing company. Interest is paid net of tax. Coupon interest: Income of non-residents is generally subject to 25% withholding tax but, if the investment qualifies as a foreign loan (that is, in a foreign currency) to a non-resident, the withholding tax rate is 20%. |
Corporate actions
The PSE acts as the official source for market information which it posts electronically on its website daily. Information can also be obtained from company registrars, corporate announcements and local newspapers. Information on all corporate announcements is required to be approved by the SEC. Once approved the PSE is able to make a public announcement on the event. Information is then obtainable from the stock exchange publication – the Daily Quotation Report, company registrars, local newspapers, Reuters and NRoSS, broker reports and PDTC.
Most common corporate events
The most common corporate actions in the Philippines are: cash dividends, stock dividends, change in par value, rights issues, warrants, proxy voting, and stock splits. Corporate action entitlements are calculated based on the investors' registered holdings as at record date and settled through PDTC.
Ex-date is three working days before record date. The disclosure of the record date must not be less than ten trading days from the said date; and the payment date shall not be more than 18 trading days from the record date.
Cash dividends are forwarded to participants' accounts via PDTC disbursement banks (the SCCP settlement banks) once good value has been received. Rights issues are voluntary corporate actions. The stockholder must avail themselves of the rights offer at least two days before the end of the offer period. They must also make payment two business days before the end of the period to allow time for clearing of cheque payments and thus avoid forfeiting their rights entitlement. New shares are delivered on listing date, which is 30 to 60 days after payment date. Rights are non-tradable and must either be exercised or allowed to lapse. The new shares rank pari passu with the parent shares.
Proxy voting and meeting attendance
Proxy voting is allowed for Annual General Meetings (AGMs) and Extraordinary General Meetings (EGMs) by stockholders registered in the books of the transfer agent as on record date. Proxy votes must be submitted and validated by the company at least five days before the meeting date. If neither the shareholder nor the designated proxy can attend the meeting, the company's representative is able to utilise the stockholder's shares for voting purposes. Split-voting is allowed. The underlying shares are not blocked from sale during the AGM/EGMs. AGMs are usually held during the second quarter of the year.
For unlisted shares, the investor is not required to appoint a proxy agent. However, the sub-custodian may only act on behalf of a client for proxy voting if shares are registered under their nominee name.