THE Philippine Stock Exchange, Inc. (PSE) on Wednesday released proposed amendments to its voluntary delisting rules, as it seeks to protect minority shareholders.

“PSE revisited the voluntary delisting rules, following receipt of complaints from the market that minority stockholders are essentially forced to accept a company’s decision to delist and the tender offer price offered by the listed company or delisting proponent, under the threat of being left with shares that have no secondary market,” the bourse operator said in a consultation paper on the proposed amendments posted on its website.

The proposed amendments covered the required approvals for delisting, and the tender offer price.

The PSE is looking increase the participation of minority stockholders in the delisting decision-making process of a company.

For instance, the PSE proposed three more conditions for voluntary delisting — it must be approved by all independent directors of the company; approved by stockholders owning at least 75% of the total outstanding and listed shares of the company (either through a meeting or a written agreement); and the number of votes cast against delisting should not be more than 10% of the total outstanding and listed shares.

The PSE also proposed to set a floor price to ensure the tender offer price will not be lower than the highest of the following:

1. highest value based on the fairness opinion or valuation report prepared by an independent valuation provider;

2. highest closing price in the six months immediately preceding the date of the notice to stockholders of the proposed delisting; and

3. the volume weighted average price (VWAP) for one year immediately preceding the date of the notice of stockholders of the proposed delisting.

These proposed amendments were benchmarked to eight other exchanges, namely the Australian Securities Exchange, Bursa Malaysia, Bombay Stock Exchange (India), Stock Exchange of Hong Kong, Indonesia Stock Exchange, Stock Exchange of Thailand, Singapore Exchange, and Taiwan Stock Exchange.

In its analysis, PSE discovered some notable differences in its delisting rules compared to other exchanges.

For instance, the other exchanges require the approval of stockholders for delisting depending on how much they own. At the PSE, only approval from the board of directors is needed, while shareholders are merely given notice.

Other exchanges also have guidelines in determining the tender offer price, while the PSE allows the delisting firm to set any price with the submission of a fairness opinion to prove that set price is fair “from the financial point of view of the valuation provider”.

The PSE’s review of its delisting rules comes in the wake of the delisting of Travellers International Hotel Group, Inc. this year and Melco Resorts & Entertainment (Philippines) Corp. last year. Analysts had noted then that some small shareholders felt disenfranchised in these firms’ exit, as the tender offer price was significantly lower than expected.

The PSE is seeking comments on the proposed amendments to voluntary delisting rules until Dec. 10. — Vincent Mariel P. Galang

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