PSE relaxes listing rules

As a way of harmonizing with international practices, the Philippine Stock Exchange (PSE) will not be requiring companies anymore to submit their business plan and financial projections when applying to list their equities or debt securities.

Under the proposed amendments of its Listing Rules, the PSE said in lieu of a comprehensive business plan, the applicant company shall instead be required to submit a detailed report on its active business pursuits and objectives, describing the technical and commercial aspects of its business operations.

"This statement describes the steps to be taken by the issuer in order to advance its business," the PSE said.

In the existing rules, the PSE requires companies applying to list in the second board (those capitalized at P100 million to P400 million) to submit a comprehensive business plan covering a minimum period of three years, enumerating the technical, commercial and financial aspects of their businesses. The business plan, moreover, must be reviewed and certified by an independent auditor.

"Financial projections shall not be required unless there are references made in the statement to future profits or losses or any other items that would be construed to form forecasts," the PSE said.

The PSE’s waiver of the financial projections gives the applicant companies more breathing room to operate since this would unlock them from the stringent monitoring of the PSE. In the present rules, the PSE may impose sanctions ranging from monetary fines to suspension of trading of the company’s shares if it fails to satisfactory explain any failure to meet the operational targets within the end of any fiscal year after listing.

Aside from the listed company, those to be penalized would also include the issue manager and/or underwriter which undertook the required due diligence.

In the same manner, the PSE said financial projects will not be required in issuing debt securities such as bonds or commercial papers since the existing rules already require a credit rating in the issue.

"This rating requirement in effect provides the investing public the credit risk profile of the issue," the PSE said. "It is also aimed at harmonizing in other international markets where projections are not required.