DOF to enforce public float threshold on listed firms


Monday, 29 November 2010 00:00


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BY KATRINA MENNEN A. VALDEZ REPORTER

LISTED companies will be barred from enjoying tax incentives and other perks if they fail to float at least a fifth of their outstanding shares to the public, the Department of Finance (DOF) said.

In a dinner briefing over the weekend, Finance Secretary Cesar Purisima told reporters that the government would now strictly enforce the 20 percent minimum public float requirement as part of the Securities and Exchange Commission’s (SEC) listing agreement even though the Philippine Stock Exhange (PSE) only obliges lfirms to offer 10 percent of their equity to the public.

“The listing agreement of the SEC should prevail. Otherwise, the finance department would assail their [companies] entitlement to tax incentives and other perks,” Purisima said.

“The goal here is not just to raise taxes. The less[er] the float, the easier it is to manipulate prices as foreign and local investors are complaining. Hence, higher public float would lead to transparent market, and make it more open to investors abroad,” he said.

Purisima already instructed Bureau of Internal Revenue (BIR) Commissioner Kim Jacinto-Henares to write the SEC to strictly enforce the 20 percent minimum public float requirement and completely abandon the 10 percent prescribed by the PSE.

“Failing to meet this minimum requirement [under the listing agreement] would no longer entitle companies to incentives, which is tantamount to government’s revenue bleeding,” the finance chief said.
Companies are only levied one fourth of 1 percent of final tax to 10 percent capital gains when it offers the minimum number of shares to the public.

“This would lead to vibrant, deeper market that is less susceptible to price influence. It is less than what we will collect but more that our stock market is at par with other markets,” Purisima said.