SEC issues additional requirements before companies can list shares

For greater transparency and protection of the investing public, the Securities and Exchange commission (SEC) has issued a set of additional requirements – anchored mainly on the Code of Corporate Governance – before companies can register their securities.

In an en banc resolution, the SEC said the additional terms and conditions for the rgistration of securities will require companies to adopt the Code of corporate Governance; allow the SEC to resolve issues of conflict of interest in the selection of an independent director; the adoption of a fit and proper rule relative to the selection of directors and officers, as is presently practised in the banking sector; and the issuance of a secretary’s certificate of the Board of Directors resolution agreeing to these additional requirements.

The SEC said it will require the Philippine Stock Exchange (PSE) to include these additional terms and conditions in its listing rules, which will hence make it mandatory for all publicly-traded companies issuing new or additional securities for listing at the Exchange.

Securities include a wide array of instruments that involve shares or other proof of participation or interests in a corporation, commercial enterprise or profit-making venture. These include shares of stocks, bonds, debentures, notes, debt papers, asset-backed securities, investment contracts, certificates of assignments, participation or trust, proprietary or nonproprietary membership certificates, and derivatives such as options and warrants.

Aside from listed companies, other entities covered by the registration requirements are pre-need companies, investment houses, banks and other financing institutions.

For those listing their shares through initial public offerings (IPOs) and additional issuances or capital calls, the SEC said it would require the registrants to return investments in case of failure to complete a project based on its timetable submitted in its prospectus.

At the same time, an approved credit line with a bank to finance the completion of a project in case of a shortfall in the proceeds of the sale of securities will also be required.

Among the requirements in the registration of securities include a complete prospectus (in the case of IPOs), its effect on ownership and mix, particularly foreign and local ownership, and credit ratings in the case of debt papers.