PSE put 11 companies on notice of possible suspension for deadline violations
The Philippine Stock Exchange [PSE 200.00] [link] shared a list of 11 companies that still have yet to file their Q1 earnings reports.
According to the rules for corporate disclosures, any of the 11 companies that fail to file their earnings reports before June 1 will be automatically suspended starting on the morning of June 1.
The list includes some notable companies like Dennis Uy’s DITO CME [DITO 4.80 2.04%], Virgilio Villar’s Medilines Distributors [MEDIC 0.74 1.37%], AbaCore Holdings [ABA 1.29 1.53%], and the recently-popular Araneta Properties [ARA 1.71 1.18%].
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Basically, these companies have one week to get their ish together before the exchange starts dropping temporary bans.
Submitting an earnings report before June 1 prevents suspension, but doesn’t eliminate the minuscule one-off fine and the associated minuscule daily fines that the company may have accumulated up to that point.
As an investor, and as someone who has been “stuck” holding shares in a suspended company before, I feel that trading suspensions are an incredibly big deal.
But that’s where the PSE’s laughably small fines actually harm investors; because the initial punishment for late filing is so light, companies feel comfortable violating the disclosure deadline as though it were no big deal.
And, if the fine is like P50,000, let’s face it, it’s not a big deal.
The problem is that when 38 companies all fail to file on time, how does an investor in one of these 38 weed out the companies that just thought P50,000 was a small price to pay for an extra couple of days of editing, from the ones that are struggling with existential problems that might result in a trading suspension?
Perhaps being on this list could be one such signal, but it’s not like it really costs any of these companies too much to still be on this list on Thursday, or on Friday.
If the late-filing penalty were far more substantial, then investors would get a stronger signal from a company’s presence on the original list of late-filing companies, and an even stronger signal from a company’s presence on this suspension-warning list, as the “penalty” for being on this list is one that any reasonable board would try their best to avoid.
I hope the PSE recalibrates these fines to make being late something that feels as uncomfortable as possible.
The sheer number of companies on this list should be a warning flag that the system isn’t working as intended.
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Merkado Barkada's opinions are provided for informational purposes only, and should not be considered a recommendation to buy or sell any particular stock. These daily articles are not updated with new information, so each investor must do his or her own due diligence before trading, as the facts and figures in each particular article may have changed.
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