PSE suspends new listing on 2 boards

The Philippine Stock Exchange has suspended any new listing on its second and small and medium enterprise (SME) boards to pave the way for the review of listing rules for the smaller-cap companies.

In a circular posted on July 12, the PSE said its board directed the bourse to review the rules of listing on the second and SME boards. “As a consequence, the exchange is constrained from acting on initial listing applications under [these] boards,” said PSE chief operating officer Roel Refran.

The second board of the PSE is meant for companies with “potential for superior growth.” Each must have an operating history of at least a year prior to listing and a market capitalization of at least P250 million.

Applicant companies for the SME board, on the other hand, are evaluated based on the integrity and capability of the company’s management and its controlling stockholders; the company’s prospects of further growth and profitability; the viability of the business and sustainability of the projected earning stream, and the company’s lack of existing material conflicts of interest.

The first or main board of the PSE, on the other hand, has more stringent requirements than either the second or SME boards. Applicants must have a track record of profitable operations for three full fiscal years or a market capitalization or net tangible assets of P500 million, provided that it has a five-year operating history.

The PSE did not explain the reason for the review but industry sources said this was an offshoot of the “unique” situation of Calata Corp., a distributor of agricultural products led by 31-year-old Joseph Calata and was the last company to list on the second board of the PSE on May 23.

Calata was allowed to proceed with its initial public offering but was required to scrap the secondary portion of the offer. As such, Calata’s offering was halved to P270 million. Since Calata’s offering was halved from the originally planned size, it did not meet the 20-percent post-IPO public float required for a company of its size. In short, the PSE bent its own policy on minimum offer size requirement to avoid legal complications if it were to otherwise withdraw approval for the listing of Calata. Doris C. Dumlao