Rappler Case Study

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The Rappler’s case that led for the SEC to revoke its registration as a corporation pointed to, according to SEC, its violation on the rules on foreign investment in media companies in the Philippines. Under the 1987 Constitution and various Philippine laws, a media company must be owned and controlled 100% by Filipinos. If a Philippine media company has foreign investor control of more than 0% of the company, then the media company disobey the law related to control restrictions. The case of Rappler is not about accepting foreign investment thru the Philippine Depositary Receipts (PDRs), a derivative instrument that derive their value from equity, by its mother company Rappler Holdings Corporation which owns almost 99% of Rappler, Inc, but…show more content…
Issuance of PDRs is one legal and procedural process in getting funds for a corporation registered in SEC. The SEC found nothing wrong with the PDRs issued to North Base Media but what lies the problem is the PDRs issued to the Omidyar Network, which Rappler called it as the “ON PDRs”. The ON PDRs had provisions that concluded a measure of control over both Rappler Holdings Corporation and Rappler Inc. The provisions comprised a condition that Rappler and Rappler Holdings cannot alter, modify, or change their Articles of Incorporation and Corporate By-Laws without discussion with ON PDR holders, and gaining the approval of at least two-thirds of all issued PDRs. With the provisions on the ON PDR’s, SEC found it that there was more than 0% control of foreigners within the organization of Rappler Holdings. Thus, a conclusion has been made that it is a violation of Philippine law on media companies. The SEC iterated that control is not just about ownership of stock. The Securities Regulation Code (SRC) has a broad definition of control which defines beyond ownership of…show more content…
Rappler’s legal issues were triggered by its criticisms and commentaries of President Duterte and his administration policies. The President has aired a lot of times that he finds these criticisms unfair, and that he will not take them for granted. Rappler’s revoking of its SEC registration is a clear pattern under the incumbent administration. In the same gesture, the President has repeatedly cautioned the owners of other media agencies like the Inquirer and the ABS-CBN that, If they continue to judge him and his administration from a high moral perch, they have to be prepared to account for their potential violations in due time. Rappler’s persecution succeeds the case regarding Inquirer owners procedurally found themselves facing charges of nonpayment of accurate taxes on their businesses, and occupying government property after the lease on the land has expired. The effect of government’s refusal to extend the lease contract, the owner- Prietos were advise to vacate the land that they had developed and occupied for more than 25 years. And this was followed by a decision to engage in talks for the sale of the Inquirer. Similarly, the President has repeatedly warned ABS-CBN for airing allegedly biased reports against him during the 2016 Presidential Election and accused the management of the Lopez-owned media company of failing to air his advertisements during the election campaign

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