SEC approves lower capital requirement for PSE listing

The Securities and Exchange Commission has approved the proposal of the Philippine Stock Exchange to reduce the minimum market capitalization requirement for the second board from P250 million to P100 to encourage more companies to list their shares in the capital market.

Jose P. Aquino, head of the SEC’s Markets Regulation Department, said: "The purpose of the reduction of the minimum capital requirement for the second board is to encourage listing on the exchange taking into account the poor economic conditions."

Aquino said this is just a temporary relief and will be effective only for this year. He said the move is part of efforts to promote more initial public offerings at the local bourse to give investors wider options.

Based on the listing requirements, a company seeking to list on the second board of the exchange must demonstrate its potential for superior growth and must have an authorized capital of at least P100 million. It must also have an operating history of at least one year prior to its listing.

In line with efforts to broaden the quality and quantity of stocks traded at the PSE, the SEC is urging corporations with P50 million in assets to go public.

Out of the 200,000 corporations registered with the SEC, only 237 are listed. And of the 237 listed firms, only 100 are actively traded.

The SEC is likewise urging the country’s top 5,000 corporations and entities registered with the Board of Investments to list their shares at the bourse to provide the public with more investment choices.

Subsidiaries of companies that enjoy incentives from the BOI are also being encouraged to list.

Only five companies pushed through with their IPO plans last year. They were Salcon Power, Highlands Prime, Banco de Oro, Jolliville Holdings, and Makati Finance Corp.

PSE Chairman Vivian Yuchengco said although it would be quite difficult to attract companies to go public at a time when the stock market is on a slump, an early move on their part would be beneficial on the long-term for both the company and its investors as the equities market recovers and brings about increase in shareholder value.

Earlier, the PSE also indicated plans to tap companies located in the country’s economic zones.

Out of about 1,000 firms located in the country’s 85 accredited ecozones, only a handful are listed — Ionics Corp., SPI Technologies and Active Alliance.

But foreign chambers seemed uneasy with the proposal particularly as this would open up their businesses to a host of additional regulatory requirements on top of what the Philippine Economic Zone Authority requires.

Nearly 80 percent of the ecozone companies are foreign owned or controlled, most of them from Japan, the US, United Kingdom, Taiwan, Singapore, Malaysia and other Asian countries.