SEC says lower minimum float allowed under exemptive relief

MANILA, Philippines — The Securities and Exchange Commission (SEC) is upholding the 20-percent minimum public float requirement for companies looking to list in the local stock market, but said that a lower initial public float will be allowed through an exemptive relief.

In a statement, the SEC said that it remains firm on the 20-percent minimum public float requirement for companies applying for initial public offering (IPO), especially given the value of higher public ownership to market depth and efficiency.

“Beyond enhancing market liquidity, the minimum public ownership requirement plays a crucial role in improving price discovery and reducing opportunities for price manipulation,” the SEC said.

The commission said that the float requirement also seeks to reduce ownership concentration and encourage good corporate governance, ultimately strengthening the Philippine capital market.

SEC Memorandum Circular 13, Series of 2017 increased the public float to 20 percent from the 10-percent requirement at the time.

However, the SEC said that after thorough discussions with the Philippine Stock Exchange (PSE), the commission has allowed, by way of exemptive relief, an initial public float of 15 percent, subject to strict criteria.

The SEC said that companies may apply for exemptive relief, provided that they bridge any gap from the 20 percent standard within less than 24 months from the listing date and only as deemed necessary by the commission.

“This covers listing applications already filed with and accepted by the commission and the exchange,” the SEC said.

The SEC said that as of March 25, 2025, the commission and the PSE have yet to receive any application for regulatory relief from any potential IPO applicant.

“The SEC is committed to maintaining a fair, transparent and efficient capital market. While the commission welcomes new listings, it upholds stringent regulatory standards that safeguard the integrity and long-term stability of the Philippine capital market and the broader economy,” it said.

PSE president and CEO Ramon Monzon earlier said that the exchange was able to secure approval from the SEC to allow companies that want to offer P5 billion or more to offer less than the 20-percent public float requirement for IPOs.

According to Monzon, these companies can offer 15 percent, with the commitment that they will do a follow-on offering or a private placement in the next two or three years to comply with the 20-percent requirement.

He said that the exemption will make it easier for companies to make their decision to do an IPO.

The new rule will have a two-year window, which could be extended again after the two-year period.

On the upside, analysts earlier told The STAR that the rule can encourage more companies to go public, boosting market activity. It also provides flexibility for large companies, especially in a market with liquidity challenges.

However, analysts said a lower initial float could reduce liquidity and concentrate ownership, making price manipulation easier.

It could also set a bad precedent as this might be viewed as the regulator bending the rules a little bit to accommodate big corporate interests.