MANILA, Philippines - The Philippine Stock Exchange (PSE) is standing firm the end-December deadline for listed corporations to comply with the minimum public float requirement of 10 percent.
“We’re sticking to the guidelines even if we know there are technical solutions. There is a fairness perspective. A number of companies have already complied by selling straight equity,” said PSE president Hans Sicat when asked whether the exchange will allow companies to issue preferred shares to meet the minimum public ownership rule.
San Miguel Brewery Inc. earlier said it was considering issuing preferred shares to boost its public float. Delisting from the bourse is also an option since SMB’s partner Kirin Brewery doesn’t want to sell more shares.
There are currently 27 listed firms that still fall below the required minimum public float. These are Allied Banking Corp., First Metro Investment Corp., Maybank ATR King Eng Financial, SPC Power, Vivant, Alaska Milk, Cosmos Bottling, San Miguel Pure Foods Co., San Miguel Brewery, Lafarge Republic, Manchester International Holdings Unlimited, Mariwasa Siam Holdings, Integrated Micro-Electronics, Alphaland, Filinvest Development, F&J Prince Holdings, Synergy Grid & Development, Eton Properties Philippines, Sta. Lucia Land, San Miguel Properties 2Go Group, PAL Holdings, Metro Pacific Tollways, JTH Davies, Globalport 900, Atok-Big Wedge Co. and PNOC-EC.
Failure by companies to raise their public ownership shall result in the suspension of trading in their shares for up to six months beginning the first trading day next year.
Once trading is suspended, any transaction on stock trades will no longer enjoy the preferential tax rate of 0.5 percent. The Bureau of Internal Revenue will instead slap the five- to 10-percent capital gains tax on stock trades.
Aside from this, companies must still pay listing fees while they are suspended.
After the lapse of the suspension period, they will automatically be delisted from the local bourse, unless they have by then complied with the requirement.
Alaska Milk Corp. whose public float currently stands at 2.28 percent, has already approved a plan to delist its shares from the bourse after being taken over by Dutch firm dairy giant Royal Friesland.
Two other companies – Metro Pacific Tollways and Eton Philippines – earlier said they were considering delisting from the exchange.
Sicat, however, remains confident that a big chunk of these erring companies would comply with the requirement, noting that most of them have indicated plans to do a private placement or a follow-on offering.
The minimum public float rule was intended to provide a fair and efficient facility for price discovery and ensure that sufficient liquidity exists. Securities exchanges in Hong Kong, Singapore and Thailand already impose minimum float requirements of between 10 percent and 25 percent.