The Philippine Stock Exchange (PSE) may recommend to corporate regulators the exemption of several listed firms from the 10-percent public float rule.
PSE president Hans Sicat told reporters that, if circumstances would warrant it, companies might be allowed to stay listed and have their shares traded on the local bourse without penalty.
“The SEC [Securities and Exchange Commission] is considering the market conditions that companies are in and what steps they have been undertaking to comply with the rule,” Sicat said on Monday.
Speaking at the sidelines of the local launch of the 12th Pacific Region Investment Conference to be held in Manila this month, Sicat said the PSE was aware that several companies were having a hard time in complying with the public float rule.
“Each industry is different. Other factors will weigh in individually,” he said. “Some industries might be in the midst of a global slowdown.”
Sicat said companies in “depressed” industries might find it difficult to find investors willing to buy shares in stocks that were perceived risky. This would make it hard for companies to meet the 10-percent public float requirement without driving their share prices down.
Under normal circumstances, companies that fail to meet the SEC’s 10-percent requirement face trading suspension of their shares. Their over-the-counter trades would be slapped a capital gains tax of up to 10 percent, making their shares less attractive.
Sicat said the PSE’s role was merely recommendatory, and that the final decision would rest with the SEC.
“We may agree with some corporations, but the SEC will have to concur,” he said.
Prominent corporations such as the Lucio Tan Group’s Tanduay Holdings Inc. and San Miguel Brewery have asked for leeway on the minimum public ownership rule.
The Lucio Tan Group sought a three-month extension to March of next year to make way for the consolidation of the group’s banking, beverages and tobacco businesses under Tanduay.
“Rest assured that the corporation will meet the MPO upon completion of this transaction,” Tanduay said in a letter to the PSE in August.