PSE sets heavier penalties for violators of disclosure rules

The Philippine Stock Exchange (PSE) will implement stiffer penalties for violations of the corporate disclosure rules as part of continued efforts to ensure a level playing field for both listed companies and investors.

Under the new scale of fines and penalties, which has been approved by the Securities and Exchange Commission, the PSE will publish the names of listed companies found to have violated the Exchange’s structured disclosure requirements.

The penalties imposed on these erring companies will likewise be made public, the PSE added.

"Making available this information to trading participants would serve as a further deterrent to violation of the covered provisions in the Exchange disclosure rules," the SEC said.

Under the existing PSE rules, listed companies are required to disclose developments within and outside the company that could influence the movement of their share prices to ensure the protection of investors.

Listed firms are also required to submit 200 copies of their annual financial statements to the PSE every year.

Several companies, however, have not been fulfilling the requirements on time. Thus, they are fined P50,000 for each disclosure violation, and an additional P1,000 for each day of delay in compliance.

To ensure a level playing field, the PSE is also considering imposing penalties on companies which disclose information to select investors or analysts prior to divulging the same information to securities regulators.

Citing Article 1, Section 3 of the Listing and Disclosure Rules, the PSE said "investors and the public shall be kept fully and accurately and timely informed by the applicant companies of all material factors that might affect their interests, and immediate and timely disclosure shall be made of any material information which might reasonably be expected to have an effect on the market activity and the prices of listed securities."

Based on a memorandum issued recently by the PSE, listed companies selectively disclosing material information to securities analysts, institutional investors or third parties ahead of the general public shall be treated as violating their disclosure obligations.

At present, listed companies face a trading suspension for failure to disclose corporate information which are published in newspapers until such time that it submits a report to the PSE.