PSE refines proposed public float rules
The Philippine Stock Exchange (PSE) has released the second draft of its proposed revisions to the amended rule on minimum public ownership (MPO), incorporating changes sought by the Securities and Exchange Commission (SEC) while inviting fresh comments from market participants.
In a consultation paper dated July 16, the exchange said stakeholders have until July 21 to submit comments on the additional revisions, which are limited to amendments proposed by the SEC after it reviewed the first exposure draft published in May.
One of the key changes in the second draft clarifies that companies granted a lower minimum initial public ownership requirement must continue maintaining at least that same approved level after listing.
Under the proposal, issuers with an expected market capitalization of at least P200 billion may still qualify for a lower MPO of as little as 12 percent, but their minimum maintaining public ownership can never fall below the initial percentage approved by the SEC and the exchange.
The second major revision deals with sanctions for companies that fail to meet the MPO requirement.
The draft retains the proposed five-year relisting prohibition and the disqualification of directors and principal officers when a company is automatically delisted for breaching the MPO rules.
However, it introduces an exception allowing directors or officers to avoid disqualification if they can demonstrate, to the satisfaction of the exchange, that they exercised reasonable measures and due diligence to ensure the company’s compliance.
The revised draft also expands the sanctions covering voluntary delistings arising from an MPO breach.
While directors and officers of companies that voluntarily delist are generally exempt from the five-year relisting ban under existing rules, the proposal states that the prohibition and disqualification will also apply if the voluntary delisting was prompted by failure to comply with the required public float.
Apart from these revisions, the rest of the proposed MPO framework remains substantially unchanged from the first exposure draft.
