Tuesday, September 11, 2001

Avoid taking minority ownership in a company.

In the Philippines, two-thirds of the outstanding capital stock is the magic number. If you have two-thirds, you can do almost anything you want in a company -- change the Articles of Incorporation, change the business, sell all the assets, even dissolve the company. If you have less than that, you can not do anything profitable with your shares, except perhaps sell them to the majority. Everytime an issue pops up, you are out voted. Sometimes you cannot even raise an issue on the floor. Majority owners even earn on the side as voting control gives them the right to vote themselves as officers of the company and charge exhorbitant salaries and per diems. Thus, if you have to enter into a business with somebody, make sure you have two-thirds; otherwise, be prepared to be the whipping boy or girl for that matter.

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