SEC thumbs down PAL request for rule deadline

MANILA, Philippines - The Securities and Exchange Commission (SEC) has denied the request of PAL Holdings Inc. – the parent firm of national flag carrier Philippine Airlines (PAL) - for an extension in the compliance with the minimum public ownership requirement of the Philippine Stock Exchange (PSE).

In a disclosure to the PSE, PAL Holdings assistant corporate secretary Cecilia Pesayco said the SEC has denied all the requests for extension of the grace period to comply with the exchange’s minimum public ownership.

PAL Holdings has a market capitalization of P40.66 billion and has 5.42 billion outstanding and listed shares equivalent to a free float of 2.3 percent.

The PSE said it would suspend listed companies whose public float levels fall below its minimum requirement starting next year while the Bureau of Internal Revenue (BIR) issued a revenue regulation stating that the preferential tax rate would not apply to firms that fail to meet the requirement after Dec. 31.

Companies whose shares are traded at the PSE enjoy a preferential tax rate of 0.5 percent and are exempted from the documentary stamp tax.

However, the BIR issued a revenue regulation last Nov. 7 imposing the five to 10 percent capital gains tax and documentary stamp tax on every stock transaction of firms that failed to maintain a public float requirement.

PSE president and chief executive officer Hans Sicat earlier said the minimum public ownership requirement is intended “to provide a fair and efficient facility for price discovery and to ensure that sufficient liquidity exists in the stock market.”

“The minimum requirement is one of the governance initiatives that we believe will help democratize the ownership of listed companies and increase trading activity. As the deadline for compliance with the rule is nearing, we urge investors to continue to update themselves of developments concerning listed companies that remain to be non-compliant up to this date,” Sicat said.

The exchange earlier gave erring companies a one-year grace period or until Dec. 31 to meet the minimum public float rule. 

The PSE requires listed firms to have at least 10 percent their issued and outstanding shares, exclusive of any treasury shares, in the hands of the public.

This time, companies that fail to meet the required public ownership level during the six-month period would be delisted from the PSE effective July 1.