||Asean Affairs 10 June 2013
SEC approves PSE listing board rules
The Philippine Stock Exchange (PSE) announced that its rules creating a new listing board structure have been approved by the Securities Exchange Commission (SEC). Under the new rules, there shall be two listing boards ? the Small, Medium and Emerging (SME) board and the Main Board. This new board structure shall replace the previous three listing board structure of the Exchange composed of the First Board, Second Board and the Small and Medium Enterprise Board.
"We would like to thank the SEC for again allowing us to pursue reforms to keep the market attuned with the needs of the times with its approval of our new listing rules. As we continue to set new milestones for the market, the importance of a more relevant regulatory environment is paramount to spur a growing market," said PSE President and Chief Executive Officer Hans B. Sicat.
Under the new rules, companies that will list on what will be called the Main Board must have an authorized capital stock of at least P500 million, and at least three years of operating history. These companies should also have cumulative earnings before income tax, depreciation and amortization (EBITDA) of at least P50 million for the last three years prior to listing. They must also have positive stockholders' equity for the immediately preceding fiscal year.
Currently, companies that want to list via the first and second boards should have an authorized capital stock of P400 million and P100 million, respectively. The first board requires at least a three-year track record of profitable operations, while the second board requires at least a one-year operating history prior to the listing application.
With the new listing board rules, a company applying for listing on the new SME board must have an authorized capital stock of P100 million or more, of which a minimum of 25 percent must be subscribed and fully paid.
The other salient features of the new rules for companies applying to list in the SME Board, are as follows:
Track record requirement - The applicant company must have a cumulative earnings before income tax, depreciation and amortization (EBITDA) of at least P15 million, excluding non-recurring and extraordinary income and/or loss, for the last three (3) fiscal years immediately preceding the application for listing. The applicant must also have a positive EBITDA in at least two (2) of the three (3) full fiscal years immediately preceding the application for listing, including the fiscal year immediately preceding the application. The company must also have an operating history of at least three (3) years prior to its application for listing.
Five-year business plan requirement - The applicant needs to demonstrate its stable financial condition and prospects for continuing growth by submitting, among others, a five-year business plan.
More stringent lock-up requirements - The shares of existing stockholders who beneficially own at least 10 percent of the issued and outstanding shares of the applicant company will be locked up for a period of two years from listing. Thus, covered shareholders cannot sell or dispose of their securities during the lock-up period. The proposed rules also prohibit a secondary offering during an initial public offering. Lastly, the company is prohibited from changing its primary business purpose for a period of seven (7) years from listing.
"The new rules should help raise the profile of publicly listed companies by putting in place requirements that will further show the viability of the companies listing in the Exchange. The new features of these rules should, in the process, also help promote investor protection," Mr. Sicat said.