THE Philippine Stock Exchange, Inc. (PSE) plans to buy back P532.01 million worth of common shares from broker shareholders until September, in a bid to reduce its broker ownership to less than 20%.
In a disclosure Thursday, the bourse operator said its board of directors has approved a compliance plan that involves a share buyback program as well as the creation of 3.5 million preferred shares.
Under the buyback program, the PSE will buy common shares held by trading participants until Sept. 30, unless otherwise extended by the board. The shares will be booked as treasury shares.
“The buyback program shall be implemented in an orderly manner and should not adversely affect the company’s and its subsidiaries’ prospective and existing projects,” the PSE said.
Meanwhile, the PSE also amended its articles of incorporation to include the creation of the 3.5 million preferred shares with a par value of P1 each. The exchange will ask consent from its shareholders for the amendment, which will then be submitted to the Securities and Exchange Commission (SEC) for approval.
The preferred shares may only be issued to brokers, in line with the group’s ownership dilution in the bourse. The securities will be non-voting, be cumulative in payment of dividends, non-participating in any further dividends, non-convertible, and can be redeemed at the board’s discretion on its third anniversary date.
Trading of PSE shares were suspended for an hour on Thursday to help investors digest the material information.
The PSE said last March that its broker ownership stood at 26.44%, higher than the 20% industry limit set by the Securities Regulation Code (SRC).
Item C of Section 33.2 of the SRC states that “no person may beneficially own or control, directly or indirectly, more than five percent (5%) of the voting rights of the Exchange and no industry or business group may beneficially own or control, directly or indirectly, more than twenty percent (20%) of the voting rights of the Exchange.”
The bourse has been looking for ways to comply with this rule. In January, it implemented a real-time broker ownership monitoring mechanism through the trading system. This automatically prevented trading participants from placing a buy order for PSE shares should their accounts exceed the limit.
The PSE previously tried to meet the single industry limit to get the SEC’s nod for its proposed acquisition of the Philippine Dealing System Holdings Corp. The deal however is unlikely to happen due to Land Bank of the Philippines’ interest in the latter’s acquisition.
Shares in the PSE fell 0.53% or P1 to close at P187 each on Thursday. — Arra B. Francia
