MANILA, Philippines – The Securities and Exchange Commission (SEC) is “firm” in implementing the 20-percent minimum public float requirement for companies wishing to list on the local bourse, although certain exemptions are allowed.
In a statement on Thursday, the regulator said the existing requirement “plays a crucial role in improving price discovery and reducing opportunities for price manipulation.”
“The [SEC] remains firm on the 20-percent minimum public float requirement for companies applying for an initial public offering (IPO), especially given the value of higher public ownership to market depth and efficiency,” the SEC said.
READ: PSE okays 15% float for firms going public
“The float requirement also seeks to reduce ownership concentration and encourage good corporate governance, ultimately strengthening the Philippine capital market,” it added.
This comes after Philippine Stock Exchange (PSE) president and CEO Ramon Monzon confirmed to reporters that the SEC had approved its proposal to reduce the minimum float to 15 percent for companies planning to raise at least P5 billion from an IPO.
In easing the rules, Monzon said companies need to be enticed to go public, especially under the current volatile market conditions.
While the CEO said the SEC had granted blanket approval, the commission clarified that it only allowed this if companies applied for exemptive relief.
So far, the SEC has yet to receive such applications from IPO-bound firms, including popular e-wallet platform GCash.
Under the SEC’s rules, companies that avail of the public float cut need to meet the 20-percent minimum within two years from their stock market debut. This can be done via follow-on offers.
“The SEC is committed to maintaining a far, transparent and efficient capital market,” the SEC said. “While the commission welcomes new listings, it upholds stringent regulatory standards that safeguard the integrity and long-term stability of the Philippine capital market and the broader economy.”
Analysts earlier warned that reducing the minimum public ownership requirement could discourage the public from investing in Philippine capital markets.