In a bid to encourage more companies to go public, the Philippine Stock Exchange (PSE) plans to relax some of its listing rules, including the strict track record of profitability.
The PSE board of governors is expected to evaluate and approve the new criteria and other changes proposed by its listing committee when it meets this week.
According to listing and disclosure group officer-in-charge Ma. Isabel Garcia, the committee is looking at alternatives to the long-standing three-year record of profitability, which mandates that prospective initial public offering (IPO) issuers should have at least P400 million in net income for the past three consecutive years.
She said under the proposal, companies may apply to list on the PSE's main board, where listed firms have a market capitalization of P1 billion and above, if they have sufficient net tangible assets or if the market capitalization of the IPO meets a certain size -- both of which will still be determined by the PSE.
"The alternative listing criteria will facilitate access to the equities market and attract established companies that have been in existence for at least five years, or even closed or family-owned corporations to list," Garcia said.
She added such liberal moves would qualify a number of companies considered ripe for listing but do not meet the current profitability benchmark being imposed by the PSE.
Garcia pointed out that the relaxation of the minimum profit requirement would be directed particularly for the years 1998 to 2000, when the aftermath of the Asian financial crisis hit companies the hardest.
Another proposed change is the modification of the chainlisting rule, which prohibits subsidiaries of listed companies to similarly list their shares if they account for a substantial portion of the parent companies' average profits.
Instead of looking into the contribution to the listed company's average earnings, the PSE will consider whether the assets and operations of the applicant company are substantially the same as those of the existing listed issuer. The PSE may allow the listing depending on the business and commercial reasons of the applicant.