The Securities and Exchange commission (SEC) has approved amendments on the lock-up rule for start-up companies proposed by the Philippine Stock Exchange (PSE).
The lock-up rule for those listed firms placed under the so-called "no track record" category were changed to encourage venture capitalists and other minority shareholders to invest more in for start-up firms that indicate their potentials in the budding stage of these firms.
The changes as approved by the SEC are as follows:
The applicant company will cause its existing stockholders to enter into an agreement with the exchange not to sell, assign or in any manner dispose their shares for a minimum period of 365 days after the listing of the shares.
*If the company meets its operational targets and financial projections for the first year following its initial listing, shares which are not considered "control shares" may be released from lock up. However, shares released from lock-up will not exceed 15 percent of the issued and outstanding shares of the company. The remaining 85 percent will be released six months after.
*The "control shares" will mean those shares owned by controlling shareholders owning five percent or more of the issued and outstanding shares.
*Should the company fail to meet its operational targets and financial projections in the first year following its initial listing, all non "control shares" may only be released six months after the end of the first year.
*For "control shares," two-thirds of the shares will remain locked-up for another 365 days, and after the second 365 days period has lapsed, one-third of said shares and any residual fractional shares will be locked up for another 365 days. --