MANILA, Philippines – The Securities and Exchange Commission (SEC) remains steadfast in enforcing the 20 percent minimum public float rule for firms aiming to list on the domestic stock exchange, though some exceptions can be made.
On Thursday, the regulatory body issued a statement asserting that the current rule “significantly enhances price determination and minimizes chances for price manipulation.”
“The SEC continues to uphold the 20 percent minimum public float requirement for firms seeking an initial public offering (IPO). This stance is particularly strong considering the benefits of increased public ownership towards enhancing market depth and efficiency,” stated the SEC.
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PSE approves 15% share float for companies making their debut
“The float requirement aims to decrease ownership concentration and promote sound corporate governance, thereby bolstering the Filipino capital market,” it further stated.
Following confirmation from Philippine Stock Exchange (PSE) President and CEO Ramon Monzon to reporters, it was revealed that the Securities and Exchange Commission (SEC) has endorsed their plan to lower the required minimum public ownership threshold to 15 percent for firms aiming to secure at least PHP 5 billion through an initial public offering (IPO).
When relaxing the regulations, Monzon stated that businesses should be encouraged to go public, particularly considering the present unstable market circumstances.
Although the CEO stated that the SEC provided general authorization, the commission later specified that this was permissible only when firms requested exemptive relief.
Up until now, the SEC hasn’t received any such applications from companies planning to go public, like the well-known digital wallet service GCash.
According to the SEC regulations, businesses availing of the reduced public float requirement must achieve at least a 20% threshold within two years after listing on the stock exchange. This target can be reached through additional share offerings.
The SEC is dedicated to sustaining an open, fair, and effective capital market,” stated the SEC. “Although the commission encourages new listings, it maintains strict regulatory criteria designed to protect the integrity and long-term stability of both the Philippine capital market and the overall economy.
Previously, analysts cautioned that decreasing the minimum threshold for public shareholding might deter individuals from investing in the Philippine stock market.