PSE wants tighter voluntary delisting rules

Philippine Stock Exchange, Bonifacio Global City. INQUIRER PHOTO/LYN RILLON

The Philippine Stock Exchange (PSE) is tightening the rules on voluntary delistings amid a wave of companies going private during the market slump.

The PSE is revisiting the guidelines anew after amending the rules in the midst of the COVID-19 pandemic in December 2020. This came as principals of large firms such as infrastructure-focused Metro Pacific Investments Corp. and cement giant Holcim Philippines announced plans to go private at relatively cheaper valuations, frustrating minority stockholders.

One of the key features is the scrapping of the 95-percent ownership threshold to successfully complete a voluntary delisting. This also means the bourse’s proposed revisions could make delisting buyouts more costly in certain cases to protect small investors.

Based on the draft guidelines, the PSE said owners of firms that want to voluntarily delist but are no longer compliant with the minimum public ownership rule are required to “make a tender offer to all other stockholders of record and accept all tendered shares.”

The previous requirement for voluntary delisting was for the principals to buy out at least 95 percent of the company’s shares.

Moreover, firms proposing to voluntarily delist must show the planned buyout would result in breaching the minimum public float rule, which will range from 10 percent to 20 percent for most companies and 33.33 percent for real estate investment trusts.

Tied loopholes

The PSE said any mandatory tender offer would also be considered as compliance with the tender offer requirement under the revised voluntary delisting rules as long as this “will not result in the circumvention of the investor protection provisions of said rules.”

The exchange wants to streamline previous guidelines and is seeking comments from the public until Sept. 8 this year.

The simplified rules also clarify certain exit provisions for listed companies as the PSE struggles to attract more initial public offerings.

At the same time, the PSE is proposing clearer rules for firms that have breached the minimum public ownership rule, which triggers an automatic trading suspension of a maximum of six months.

The PSE is proposing that firms may restore compliance or file a petition for voluntary delisting during this period. Their failure to do so will result in their automatic delisting otherwise known as involuntary delisting.

Firms that have been automatically removed in this manner cannot reapply for another public listing within five years. Moreover, directors and principal officers of the firm are also “disqualified from becoming directors or principal officers of any company applying for listing within the same period counted from the time of delisting.” INQ