PSE to suspend trade of delinquent firms

The board of the Philippine Stock Exchange has approved a resolution to suspend listed companies with insufficient public ownership on the first trading day of 2013, PSE chairman Jose Pardo said on Wednesday, Dec. 13, 2012.

The board of the Philippine Stock Exchange has approved a resolution to suspend listed companies with insufficient public ownership on the first trading day of 2013, denying relief to those seeking temporary reprieve from complying with the bourse’s requirements.

“We won’t delist them. We will suspend their trading rights by January 1,” PSE chairman Jose Pardo told the Inquirer late Wednesday.

Pardo said the Bureau of Internal Revenue had also recently informed the bourse that it would issue a revenue regulation removing the preferential tax rate on trades of shares of companies suspended from the exchange.

“We will just impose what already has been agreed upon with the government,” Pardo said in an interview after the board meeting.

When a delinquent company is suspended from trading, the sale of its shares may only be conducted outside the trading system of the PSE or over the counter. These shares will be subject to a capital gain tax of between 5 and 10 percent, instead of the preferential tax rate of ½ of 1 percent, Pardo said.

Apart from capital gain taxes on sale of shares—equivalent to 5 percent for transactions worth up to P100,000, and 10 percent for those in excess of P100,000—trades on unlisted companies will be slapped with a documentary stamp tax of P0.75 for every P200 of the par value of the stock.

Pardo said the PSE looked at the companies that failed to comply with the 10-percent minimum public float and saw that daily trades on these firms, with some having large market capitalization, were not too heavy.

On requests for a grace period, Pardo said the PSE would forward the petitions to the Securities and Exchange Commission.

But the arguments of the petitioning firms “have to be very compelling and very specific on how they will meet the 10-percent minimum (float),” he said.

However, Pardo said the BIR had indicated that if the SEC were to approve the plan of these companies, the bourse would lift the preferential tax rate on trades of these firms.

“So the board decided, para walang gulo (so there won’t be any confusion), by Jan. 1 we will suspend trading on those that don’t meet [the requirements],” Pardo said. “There will be guidelines on over the counter [trades] subjected to 5 and 10 percent [capital gains tax]. Operationalizing the policy is now being sorted out by our people, to be submitted to PSE and BIR on how best to impose this agreement.”