Tighter voluntary delisting rules seen

The Philippine Stock Exchange has drafted a tighter framework for the voluntary delisting of public companies amid complaints on lack of protection for minority stockholders.

“The PSE revisited the voluntary delisting rules, following receipts of complaints from the market that minority stockholders are essentially forced to accept a company’s decision to delist and the tender offer price offered by the listed company or delisting proponent, under the threat of being left with shares that have no secondary market,” PSE president Ramon Monzon said in a memorandum dated Dec. 3.

The local bourse is now seeking comments to the proposed amendments until Dec. 10 this year, after which the final rules will have to be approved by the Securities and Exchange Commission.  

Overall, the proposed rules seek to “enable minority stockholders to participate in the delisting decision-making process.” This developed amid some controversy arising from the delisting of gaming stocks Melco Resorts Philippines and more recently, Travellers International Hotel Group.

Among others, the proposed framework requires that the act of delisting must be approved by all independent directors of the listed company and by stockholders owning at least 75 percent of the total outstanding and listed shares.

Furthermore, the number of votes cast against the delisting proposal should not be more than 10 percent of the total outstanding and listed shares.

Addressing complaints on unfair pricing, PSE also proposed to set a floor price such that the tender offer price would not be lower than the highest of the following:

– the highest value based on the fairness opinion or valuation report prepared by an independent valuation provider;
– the highest closing price in the six months immediately preceding the date of the notice to stockholders of the proposed delisting; and,
– the value-weighted average price for one year immediately preceding the date of the notice to stockholders of the proposed delisting.

The proposed revisions are in line with what the PSE’s peer stock exchanges in the region currently practice.

Meanwhile, the PSE’s central securities clearinghouse has tapped a unit of London Stock Exchange to provide a new system that will ensure a smoother and more efficient clearing and settlement process.

The PSE’s wholly-owned Securities Clearing Corporation of the Philippines (SCCP) entered into a software license and maintenance agreement and a consultancy services’ agreement with Millennium IT Software (Private) Ltd., a subsidiary unit of the London Stock Exchange Group.

“The installation of this new clearing and settlement system will enable SCCP to improve and enhance the services it provides to the market,” the PSE said in a disclosure to the Philippine Stock Exchange on Wednesday.

The agreement covers the customization, use and maintenance of the Millennium Post Trade solutions and Millennium Risk products, which will replace SCCP’s current clearing and settlement, risk and collateral management systems.

Last September, the board of PSE approved the acquisition of additional shares in SCCP of up to two million shares with par value of P100 for a total investment of P200 million. The additional investment funded the SCCP’s new clearing and settlement system.—DORIS DUMLAO-ABADILLA