PSE reinstates rule on 10% public float for listed firms

MANILA, Philippines - The Philippine Stock Exchange (PSE) has approved the reinstatement of a rule requiring listed firms to meet a minimum 10 percent public float to remain listed on the local bourse.

The rule, which was the subject of various debates across the terms of various boards of the PSE, was revoked in 2005 as a continuing listing requirement and instead imposed as a requirement only for initial listing and backdoor listing applications.

“Reinstating the minimum public ownership rule as a continuing listing requirement is aligned with our goals to be at par with the rest of the regional exchanges and to help address liquidity issues in the local capital markets,” said Francis Lim, PSE president and chief executive officer.

Stock exchanges in Hong Kong, Singapore and Thailand already impose minimum float requirements of between 10 and 25 percent, Lim noted.

PSE data show that about 71 percent of 176 companies are compliant with the exchange’s minimum public ownership (MPO) rule as of November 2009.

The rule is in line with the Capital Market Development Plan which aims to provide a fair and efficient facility for price discovery and to ensure that sufficient liquidity exists.

Currently, the PSE imposes the following minimum offering to the public requirement for initial public offering (IPO) applicants: 33 percent for market capitalization not exceeding P400 million; 25 percent for market cap over P400 million to P1 billion; 20 percent for market cap over P1 billion to P5 billion; 15 percent for market cap over P5 billion to P10 billion and 10 percent for market cap over P10 billion.

The proposed 10 percent MPO rule applicable to the existing listed companies is independent of the current minimum offering to the public requirement for initial listing applications as such proposed 10 percent MPO rule is a continuing listing requirement.

Aside from this, the PSE board also approved the specific disclosure requirements and additional annual listing maintenance fees to be imposed on listed companies for non-compliance with the proposed 10 percent minimum public ownership rule.

The additional annual listing maintenance fees shall be imposed on non-compliant companies after the lapse of the 18-month grace period within which to comply with the 10 percent ownership rule.       — Zinnia dela Peña