PSE orders delisting of PNOC-EC

The Philippine Stock Exchange has concluded a three-year campaign to weed out companies with scant public float with only one casualty, PNOC Exploration Corp.

PNOC is scheduled for involuntary delisting today.

PSE president Hans Sicat said that of the 40 firms whose public float fell below the 10 percent required in the reinstated 10-percent minimum public ownership rule, only PNOC-EC remained non-compliant as of the deadline last Friday.

In a memorandum dated June 28, the PSE issued an order delisting PNOC, the upstream oil and coal arm of state-run Philippine National Oil Co., from its official registry effective July 1, 2013.

Three other companies—Nextstage Inc., Philcomsat Holdings Corp. and PAL Holdings—have avoided delisting after taking steps to meet the requirement.

In the case of NextStage and Philcomsat, Sicat said they had “done their transactions and are just waiting for BIR (Bureau of Internal Revenue) certificates.” PAL Holdings, he said, did a private placement to comply with the rule.

The Securities and Exchange Commission had given NextStage, Philcomsat and PAL Holdings a grace period of until July 31 to complete their documentation to prove compliance. Sicat said trading of these companies’ shares would remain suspended during the extension period.

The PSE revived the minimum public ownership rule in January 2010 and gave non-compliant companies until end-2012 to avoid suspension. Starting the first trading day of 2013, the PSE suspended trading on a number of non-compliant companies.

Non-compliance after the six-month suspension automatically results in delisting.

The stock market has allowed many of the non-compliant companies to widen their public float, some of them resumed trading only a few months of suspension. Others have opted for voluntary delisting—including San Miguel Brewery Inc., San Miguel Properties Philippines Inc., Eton Properties Philippines Inc., Metro Pacific Tollways and First Metro Investment Corp.

Companies that have voluntary delisted can “come back anytime,” Sicat said. “If involuntarily delisted, there’s a five-year cooling off period,” he said.

Involuntarily delisting, however, also requires a number of steps,  including the required tender offering to give minority shareholders a chance to exit.

PNOC-EC was reportedly planning to conduct a follow-on offering but failed to do so during the grace period given by the PSE.

The PSE’s minimum public ownership requirement of 10 percent for continued listing aims to provide a “fair and efficient facility for price discovery and to ensure that sufficient liquidity exists in the stock market.”

For shareholders of an unlisted company, the biggest implication is a higher tax when shares change hands. The BIR imposes capital gains tax and a documentary stamp tax on every sale, barter, exchange or other disposition of shares of unlisted companies. Doris C. Dumlao