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 7 Apr 2009

Philippines exchange plans new board

The Philippine Stock Exchange (PSE) is planning to create a fourth board which will be reserved for companies that will adhere to stricter principles of corporate governance, reported the Manila Times.

If established, the PSE will be the first in Southeast Asia to create what it temporarily calls the “corporate governance board," which is expected to be the “blue chips of the blue chips," Francis Lim, PSE president and chief executive officer said.

Companies in the fourth board will “set the benchmark on how enterprises should manage their businesses," Lim said.

Corporations belonging to the first and second board may choose to migrate to the corporate governance board since “investors will feel more safe with their investments in a company which has better set of rules for transparency and accountability," he said.

However, the initiative “will still take time…we’re still studying what criteria to include," he added.

“Valuation will be higher for a company which will be in the corporate governance board," he added.

The Sao Paolo Stock Exchange of Brazil has been the most successful in coming up with a board for corporate governance of its companies, Lim said.

The bourse is studying other countries’ corporate governance practices which it may include in the PSE’s plan for the fourth board.

Currently, the PSE has three boards – the first board, whose member-companies are required to have a pre-tax profit of at least P50 million and a minimum pre-tax profit of P10 million for three previous years before listing.

Meanwhile, companies subsumed under the second board “must demonstrate a potential for superior growth," the PSE said in its website.

For those applying to list at the bourse’s small and medium enterprises (SME) board, firms must at least be operational for at least one year and must report positive net operating income during the last financial year.




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