The Philippine Stock Exchange issued a formal penalty notice dated July 9, 2026, against First Gen Corporation for violating eight disclosure provisions under Article VII of exchange rules. The violations relate to the company's handling of material information about change-of-management clauses embedded in deals with Enrique Razon's Prime Infrastructure and BDO Unibank, clauses that expose the energy firm to approximately P23.5 billion in potential losses if chairman and CEO Federico 'Piki' Lopez is removed from leadership. The penalty follows months of public conflict within the Lopez family, with majority cousins holding 71% of Lopez Inc. accusing Piki of delaying disclosure of deal terms that made him expensive to fire, while First Gen defended its actions as protecting equal access to material information and following board-approved processes. The exchange's Publication of Penalties notice cites breaches of rules governing timely, accurate, and complete disclosure to investors, including a duty to correct incomplete prior filings within 10 minutes of discovering the gap—a standard measured against the roughly 60 days investors waited to learn full details of the exposure.
PSE Cites Eight Article VII Violations in July 9 Penalty Notice
The Philippine Stock Exchange's Publication of Penalties notice dated July 9, 2026, lists First Gen Corporation alongside another sanctioned company for breaching Sections 1, 2, 4.1, 4.2, 4.3, 4.4(u)(ll), and 16 of Article VII. The notice does not identify which specific disclosures triggered the sanction, does not state the penalty amount, does not specify the period covered, and does not say whether First Gen contested the findings or intends to appeal. Penalties for disclosure violations under exchange rules typically take the form of fines.
Sections 1 and 2 establish the foundational duty that material information must be disclosed fully, fairly, accurately, and on time, with equal access for all investors. Section 4.1 requires disclosure within 10 minutes of a material event's occurrence. Section 4.2 prohibits selective communication of material non-public information. Section 4.3 defines the test for materiality. Section 4.4 lists specific events presumed material, including board or stockholder resolutions approving material acts under paragraph (u) and borrowing of significant funds outside ordinary business under paragraph (ll). Section 16 imposes a separate duty to correct or update prior disclosures within 10 minutes once a company learns they were inaccurate or incomplete.
Three Deals Totaling P135 Billion Contain Leadership-Tied Clauses
First Gen, under chairman and CEO Federico 'Piki' Lopez, structured three transactions with Enrique Razon's Prime Infrastructure and BDO Unibank. The first involved the sale of a 60% stake in its gas business to Prime for P48.8 billion at closing, adjusted from an agreed P50 billion. The second was an investment in Prime's pumped-storage hydropower projects, announced on February 13 as roughly P75 billion for a 40% interest and signed in March as a 33% interest worth approximately P62 billion. The third consisted of P24.75 billion in committed BDO financing supporting the hydro acquisition.
All three instruments carry change-of-management triggers tied to Piki's continued leadership. Two allow Prime to require First Gen to sell its remaining hydro and gas stakes back at a 25% discount if Piki is removed, an exposure First Gen quantified at approximately P23.5 billion. The third allows BDO to declare a default that can cascade through outstanding loans of the wider First Philippine Holdings group, the parent of First Gen. According to First Gen's April 17 disclosure, a Change of Management Control is an event of default in outstanding BDO loans triggered if Piki ceases to be chief executive, if his designees lose their board and executive committee majority, or if Piki and his family cease to own directly or indirectly at least 29.17% of Lopez Inc.
First Gen Amended February and March Disclosures in April 2026
First Gen's original February 13 disclosure of the board meeting that approved the hydro transaction contained no mention of a change-of-management-control clause. That language appears only in an amended version of the filing dated April 2026. The company's disclosure of the Definitive Agreements, first filed on March 9, was amended on April 30 to describe the clause and to quantify the 25% discount at approximately P15.5 billion on the hydro shares and P8 billion on the remaining gas shares.
The exchange's citation of Section 16, which requires companies to correct or update prior disclosures within 10 minutes of learning they were inaccurate or incomplete, addresses the gap between original filings and amended versions. The roughly 60 days investors waited to learn about the P23.5 billion exposure is measured against the 10-minute standard.
Lopez Majority Accused Piki of Secrecy While First Gen Cited Board Approval
The Lopez majority cousins, led by Eugenio 'Gabby' Lopez and representing three family branches holding 71% of Lopez Inc., stated in an April 22 press release that two "poison pills" keeping Piki in place "were disclosed 6 months and 2 months late, respectively, in clear violation of stock market rules meant to protect the investing public by giving them full, fair, accurate, and timely information." The majority noted the amounts involved were "roughly equivalent to a third or so of the market capital of First Gen" and "would affect shareholder dividends and eventually share prices if triggered."
In an April 20 statement, the majority said there were "two, not one as earlier discovered, poison pills" structured so Prime would benefit while "the shareholders of First Gen are thrown under the bus." The statement asked, "So who is Piki working for?" and added, "More than a lifetime's worth of money owned by other people was put on the line all for one man's job security. And it was all done in secrecy."
First Gen responded in an April 5 press statement that it enters contracts "only after conducting transparent and rigorous evaluations, and only upon thorough review and approval by its Board of Directors." The company stated, "First Gen, as a publicly listed company, observes with fidelity the rights of all stockholders to equal access to material information by avoiding its premature and selective disclosure, as mandated by law." The company noted the Prime transactions were unanimously approved by a board that included both Piki and Manuel L. Lopez, cousins now in different camps.
At the May 28 annual stockholders meeting, First Gen president Giles Puno stated the change-of-management-control clause "was among the topics presented to, deliberated, and approved by the Board of Directors during its meeting in February 2026, prior to the signing of the head of terms agreement with Prime." Puno said the board representative of KKR, which holds roughly 20% of First Gen through Valorous Asia Holdings, was present, as were other directors, and the deal received "unanimous approval following several questions, clarifications, deliberations, and analysis among the directors." He described the provision as "widely recognized as a relatively standard contractual mechanism in the energy and infrastructure industries" and stated, "it was Prime, which requested the change of management control clause, as it clearly recognized the expertise of our chairman, Piki Lopez, as well as members of First Gen's management team."
Penalty Applies Disclosure Rules Designed to Protect All Investors
The exchange's sanction does not settle who should run the Lopez empire or prove every allegation raised by the majority. It marks the disclosure handling as a governance and compliance issue by testing competing narratives against Article VII's rulebook. The citation of Section 4.2, which prohibits selective disclosure, appears on the list of rules First Gen was sanctioned for breaching—the same provision the company invoked as its shield in defending against premature disclosure.
The citation of Section 4.4(ll), the rule on significant borrowings outside ordinary business, addresses disclosure questions touching major financing that was not routine and that interacted directly with control risk. For ordinary investors who do not participate in due diligence, negotiate terms, or sit in boardrooms, disclosure rules exist to close information gaps. The market works to the extent that trust in the adequacy of disclosed documents is not abused.
FAQ
What did the Philippine Stock Exchange penalize First Gen for on July 9, 2026?
The Philippine Stock Exchange issued a formal penalty notice dated July 9, 2026, against First Gen Corporation for violating eight disclosure provisions under Article VII of exchange rules, including Sections 1, 2, 4.1, 4.2, 4.3, 4.4(u)(ll), and 16. The violations relate to the company's handling of material information about change-of-management clauses in deals with Prime Infrastructure and BDO Unibank that expose the firm to approximately P23.5 billion in potential losses if chairman and CEO Federico 'Piki' Lopez is removed.
Why did First Gen amend its February and March 2026 disclosures in April?
First Gen's original February 13 disclosure of the board meeting approving the hydro transaction contained no mention of a change-of-management-control clause, and its March 9 disclosure of Definitive Agreements also omitted this information. The company filed amended versions in April 2026 to describe the clause and quantify the 25% discount at approximately P15.5 billion on hydro shares and P8 billion on remaining gas shares. Section 16 of Article VII requires companies to correct or update prior disclosures within 10 minutes of learning they were inaccurate or incomplete.
How did the Lopez majority cousins and First Gen defend their positions?
The Lopez majority cousins, holding 71% of Lopez Inc., stated in April 22 and April 20 press releases that two "poison pills" were "disclosed 6 months and 2 months late" in violation of stock market rules, with amounts "roughly equivalent to a third or so of the market capital of First Gen." First Gen responded in an April 5 statement that it "observes with fidelity the rights of all stockholders to equal access to material information by avoiding its premature and selective disclosure." At the May 28 annual stockholders meeting, First Gen president Giles Puno stated the clause was "presented to, deliberated, and approved by the Board of Directors" in February 2026 and described it as "a relatively standard contractual mechanism in the energy and infrastructure industries."
