MANILA, Philippines — The Philippine Stock Exchange’s amended rules on minimum public ownership (MPO) took effect last January 1 after being approved by the Securities and Exchange Commission (SEC).
The amended rules will give listed companies a grace period until December 31, 2012 to comply with the Exchange’s 10 percent MPO requirement.
“The amendments to the minimum public ownership rules form part of our continuing efforts to enhance corporate governance and improve market liquidity. The support that SEC has extended to us in this respect is very much appreciated,” PSE president Hans B. Sicat said.
Under the amended rules, a listed company failing to meet the required minimum public ownership after the December 31, 2012 deadline, shall be suspended from trading its shares for a period of not more than six months.
The company shall also be automatically delisted if it remains non-compliant with the MPO requirement after the lapse of the suspension period.
If a listed company fails to comply after the prescribed period due mainly to justifiable causes such as tender offer and merger and acquisition transactions, it may file an appeal to the PSE for an extension or granting of grace period before trading of their shares are suspended at the PSE.
The appeal for a grace period must include a concrete program to restore the public ownership level to the required level. Should the PSE find the appeal reasonable, the PSE may then recommend to the SEC for approval the extension or granting of a grace period.
Further, a company that files for voluntary delisting on the ground of non-compliance with the MPO rule must conduct either by itself or through its controlling shareholders, a tender offer to all stockholders of record.
Listed firms are required to disclose a public ownership report within 15 calendar days after the end of each quarter.
“We want to balance the interest of all stakeholders to ensure a more appropriate application of these rules. So while we are extending the deadline to the end of 2012 for affected listed companies to comply with the MPO requirement, the imposition of trading suspension was advanced to as early as 2013 for companies that still fail to meet the requirement after the grace period,” Sicat said.
PSE data as of end-September 2011 show that about 16 percent or 41 companies are non-compliant with the Exchange’s current MPO rule.
“Given that the public ownership of many non-compliant companies falls just below the 10 percent requirement, we are optimistic that they will comply with the deadline set in these rules,” Sicat added.