PSE to tighten rules on listing

The Philippine Stock Exchange plans to implement stricter requirements to make sure that only the cream of the crop among local businesses will be listed on its top board.

PSE governor and listing committee chairman Robert Coyiuto Jr. said they are looking at stretching the rule on corporate existence to between 10 and 20 years, inclusive of the three-year profit track record now in place.

"We want to deepen the track record to include the companies’ background as family-run business. We believe this will provide the integrity to attract investors and help drum up more positive reception to the market," Coyiuto said.

He cited the case of the Lorenzo-controlled Macondray Plastics Inc. and Pancake House which consecutively listed at the PSE late last year and were able to stir enough investor interest to break a three-year long streak of bearish initial public offerings (IPOs).

Paint maker Corro Coat, another family-owned corporation, was also warmly received at the PSE when it listed its shares last year despite not being a household name but whose business has been built up by the family to make it the dominant supplier of its kind in the country today.

Coyiuto said a liquidity boost due to more IPOs can be made possible if other government agencies such as the Board of Investments (BOI) can formulate more stringent rules for their applicants.

Under BOI rules, companies availing of the generous tax incentive packages for their projects are required to list at least 10 percent of their shares within 10 years from project approval.

Under the PSE listing rules, firms intending to list at the first or main board of the exchange must have at least three full fiscal years of profitable operations (at least P50 million in cumulative consolidated pre-tax profit); a market capitalization of P500 million or net tangible assets of P500 million, both on condition that they have a five-year operating history.

In the second board, the listing rules are more relaxed since the PSE does not require a track record of profitably and only a minimum of one year in operating history.