PSE targets to release revised voluntary delisting rules by Q1

By Denise A. Valdez
Reporter

THE Philippine Stock Exchange, Inc. (PSE) is targeting to release the revised rules on voluntary delisting by the first quarter of 2020.

PSE President and Chief Executive Officer Ramon S. Monzon told reporters last week the bourse operator is “committing” to have new delisting rules out by the first quarter as a response to complaints on the recent delistings of Melco Resorts and Entertainment (Philippines) Corp. and Travellers International Hotel Group, Inc.

“Ilalabas namin [We’ll release the draft] for comment beginning of the year. Give it two weeks for comments, then we’ll assimilate the comments. Hopefully by February we draft our final rules, then have it approved by the board. Submit it to SEC (Securities and Exchange Commission) for their approval, and then that will be the new delisting rules,” he said.

The PSE published earlier this month its proposed amendments to its voluntary delisting rules which focused on changing required approvals and tender offer price.

For the required approvals, the PSE wants companies to gain the approval of all independent directors and stockholders that own at least 75% of its total outstanding and listed shares. It must also ensure that votes against the delisting plan would not exceed 10% of a company’s total outstanding and listed shares. This is an amendment from the current practice of requiring only the approval of a company’s board to delist.

For the tender offer price, the PSE is proposing to consider whichever will be the highest of three indicators: the fairness opinion price of a company as given by an independent valuation provider, its highest closing price in the last six months, or its volume weighted average price (VWAP) for one year. This would change the current practice of basing the tender offer price only on fairness opinion.

Mr. Monzon said some listed companies gave preliminary comments that noted the 75% stockholder approval is too high. But the PSE is arguing that this figure is benchmarked from other foreign exchanges and is “not made up.”

But he noted the PSE received a valid comment on the tender offer price amendment, where companies are saying that if the highest price for the past six months is considered, it may reflect an unusual, one-day spike that would skew the value unfairly.

“That’s a valid comment. We have to address that,” Mr. Monzon said.

After the holidays, the PSE will collect more comments from underwriters and investors before a final review of the proposed amendments.

Meanwhile, Mr. Monzon said the PSE is looking to increase the required capitalization of brokers to P100 million from P30 million as part of its streamlining efforts.

“Right now, our capitalization is still at P30 million, minimum… I think that’s too low at this day and age,” he said.

With the increased capitalization, the PSE is hoping brokers “can afford the right number of employees to ensure proper segregation of actions.”

Mr. Monzon said the case of R&L Investments, Inc. — which reported losing more than P700 million due to a rogue clerk that transferred client shares into another account — could have been avoided had the company been able to employ different persons to handle various functions within the brokerage.