PSE starts to demutualize

The Philippine Stock Exchange (PSE) has started the first phase of its demutualization, with the members approving the amendment of its by-laws to effect its conversion from a non-stock to a stock corporation.

In a special membership meeting last week, the PSE member-firms voted to change the bourse’s structure from a non-stock, member-owned and governed organization into a stock corporation, wherein its ownership will be open to the public.

Hence, the PSE will follow other demutualized stock exchanges such as the Stockholm Stock Exchange (1993), Amsterdam (1997), Australia (1998), Singapore (1999) and Hong Kong (2000).

PSE president Ramon Garcia said this milestone event is expected to take shape by August 2001, or a year after the new Securities Regulation Code took effect.

The process, Garcia said, will be completed with the assistance of consultants funded by an Australian $500,000 grant from the Philippines-Australia Governance Facility (PAGF)-Australian Agency for International Development (AusAid).

These consultants will assist the PSE in, among others, developing its business units, instituting organizational changes, strengthening market regulation rules, and formulating guidelines on the rights of trading participants, Garcia added.

"As a demutualized organization, the PSE is seen to have greater flexibility to respond to threats and opportunities while creating long-term value for all market stakeholders," the PSE official said.

The conversion into a stock corporation will not affect the status of the PSE members as they will retain all rights and privileges. There won’t be any changes in the way trading of stocks are conducted.

The conversion will be effected by dividing the assets of the exchange proportionately to the number of members. Based on the PSE’s conversion guidelines, the 184 member-firms will be entitled to eight million shares each at an assumed par value of P1, on the PSE’s net worth of P1.472 billion. – Conrado Diaz Jr.