By Denise A. Valdez, Senior Reporter

THE Philippine Stock Exchange, Inc. (PSE) increased the minimum public ownership (MPO)requirement for companies that plan to list on the stock market.

In a memorandum released Tuesday, the bourse operator said companies applying for an initial public offering (IPO) are required to offer at least 20% to 33% of their outstanding capital stock to the public.

The required minimum public float will depend on a company’s market capitalization. Those with a market cap not more than P500 million should offer 33% of their outstanding capital stock post-IPO or P50 million, whichever is higher.

Firms with a market capitalization of between P500 million and P1 billion should have a public offer size representing 25% of their capital stock or P100 million.

Companies with market capitalization exceeding P1 billion must have a public offer of 20% of their outstanding capital stock or P250 million.

After listing, a company is required to maintain a public float of at least 20% at all times.

The 20% minimum public ownership requirement also applies to companies that will list by way of introduction or conduct a backdoor listing.

“For companies doing a backdoor listing, compliance with the 20% MPO shall be reckoned from the actual issuance or transfer of securities which triggered the application of the Backdoor Listing Rules or from actual transfer of the business in cases where the Backdoor Listing Rules are triggered by substantial change in business,” the PSE said.

These adjustments are expected to benefit the market by spurring liquidity, therefore helping address the susceptibility to price manipulation, said Aniceto K. Pangan, equity trader at Diversified Securities, Inc.

“A higher minimum public float should be positive for the market and the investors as valuations will be market driven,” he said in a text message.

The previous minimum public ownership requirement for listed firms was 10%, except for companies that conducted IPOs starting 2017,  which were required to have a minimum public float of 20%.

“(I) think it will stimulate more trading activity and liquidity, which in turn will better represent the fair value of stock and sentiment of shareholders,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said when asked about the new guidelines.

In its published guidelines, the PSE said it is its intention to increase market depth and liquidity by raising the public ownership of listed firms.

“The increase in liquidity improves market efficiency, reduces volatility and helps in better price discovery,” it said.

The PSE said this helps the Philippines’ ongoing ASEAN integration efforts by attracting more capital into the local bourse.

The new guidelines took effect on Aug. 3.

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