PSE reviews rules on involuntary delisting

The Philippine Stock Exchange (PSE) is reviewing its rules on involuntary delisting in its efforts to weed out the bourse of about 10 "non-performing" companies, PSE president Ernest Leung said over the weekend.

"We are reviewing our policies on dormant companies – how do we defined them?" he said.

But based on the PSE’s existing rules, there are no clear-cut reference to dormant companies nor a specified time frame that would categorize them as dormant.

Leung said the review would focus on whether the companies would be assessed based on the length of their inoperation, the absence of any market activity, or falling into a negative net worth company.

On Sept. 2000, the PSE came up with a set of criteria for forced delisting to ensure the quality of companies listed at the PSE and to afford additional protection to the investors.

Among the criteria include liquidation, dissolution or the firm’s inability to continue with its business operations; the stockholders equity becomes negative; a false market existed in the company’s stock trades (i.e. there are no actual buyer or seller, creating an impression of active trading); or the trading volume of the listed company falls below the trading volume requirement of the PSE.

The PSE also considers as grounds for delisting the following: failure to comply with the Listing Agreement or the Listing and Disclosure Rules despite a specific period notice; the cancellation or revocation of its securities registration with the Securities and Exchange Commission; the retirement, reclassification or redemption of a company’s entire outstanding amount of listed shares, repeated violations of disclosure rules or reportorial requirements; the illegal repurchase of its own securities; or if the listed company or its management engage in operations that are unlawful or contrary to public interest.

Since the new delisting rules took effect, no company has yet been stricken off the list of traded issues at the PSE. Two firms, however, have recently indicated they will be voluntarily delisting their shares – Nasipit Lumber due to losses-induced dissolution and Alsons Cement due to its merger with Union Cement. – Conrado Diaz Jr.