SEC hikes public float to 20%
| posted November 21, 2017 at 07:45 pm by
Alena Mae S. Flores |
http://manilastandard.net/
The Securities and Exchange Commission said Tuesday it approved with finality the increase in the minimum public ownership of listed companies from the current 10 percent to 20 percent.
The corporate regulator said it would publish a new circular announcing the increase in minimum public float, starting with companies planning to hold an initial public offering and list with the Philippine Stock Exchange. The order would become effective 15 days after the publication.
“For existing companies, are we are still looking at it. All options are on the table,” SEC Markets and Securities Regulation Department director Vicente Graciano Felizmenio Jr. said.
Felizmenio said the SEC was expected to come up with a decision for existing listed companies by the first quarter.
“Increasing the current MPO level is part of the commission’s efforts to encourage more Filipinos to participate in the capital markets. In turn, this will enhance the overall attractiveness of listed shares in the Philippines,” it said.
The move will boost liquidity, improve price discovery and lessen the opportunities for price manipulation.
The SEC earlier said it wanted to raise the public float gradually from 10 percent to 25 percent, 30 percent and 35 percent. It approved on Oct. 19 a resolution mandating a minimum 20-percent public float for companies applying for initial public offering.
Under the resolution, all companies that will file registration statements and with intention to list their shares for trading in an exchange shall apply for registration with a public float of at least 20 percent.
Public float of a company refers to the portion of the issued and outstanding shares that are freely available and tradable in the market and are non-strategic in nature or those not meant for the purpose of gaining substantial influence on how the company is being managed.
Significant shareholdings of 10 percent or more of the total issued and outstanding shares of the company are considered strategic and thus excluded in the public float of the company.
All publicly-listed company shall at all times maintain a minimum public ownership of at least 20 percent.
The SEC said that if the minimum ownership of a listed firm fell below 20 percent at any time after registration, such listed company should bring the public float to at least 20 percent within a maximum period of 12 months from the date of such fall.
The current average free float requirement in the Asian region is at 25 percent, significantly higher than the mandated level of 10 percent in the Philippines.
The SEC said more countries were now advocating for higher public float and taking steps to encourage increased liquidity.
It said higher public float levels result in increased liquidity, large and dispersed shareholding which lowers the opportunities for collusive market action or price manipulation and reduced ownership concentration which also encourages good governance.
