Voluntary delisting rules tightened

THE Philippine Stock Exchange, Inc. (PSE) has tightened rules on voluntary delisting after complaints from minority shareholders who were dissatisfied with the tender offer price given by companies that have delisted from the stock exchange in recent years. 

In a memorandum issued on Monday, the PSE said the Securities and Exchange Commission (SEC) had approved changes to voluntary delisting rules. These will take effect immediately.

“The delisting must be approved by: a. At least two-thirds of the entire membership of the board, including the majority, but not less than two, of all of its independent directors; and b. Stockholders owning at least two-thirds of the total outstanding and listed shares of the listed company,” the PSE said in the memorandum.

Under the rules, the company must also make sure that votes against the delisting plan do not exceed 10% of a company’s total outstanding and listed shares.

The previous rules required only the approval of a listed company’s board to delist.

Under the PSE’s new rules, a minimum tender offer price “shall be the higher of” the highest valuation based on a fairness opinion or valuation report given by an independent valuation provider. It should also be higher than the volume weighted average price of the listed security for one year immediately before the date of the company’s disclosure of the board approval of its delisting plan.

This changes the current practice of basing the tender offer price only on fairness opinion.

The new rules are a more objective guide to companies that want to delist from the market, Regina Capital Development Corp. Head of Sales Luis A. Limlingan said.

“The PSE wants to consider what is fair for all stakeholders in devising a more objective guide to delist from the bourse,” he said in a mobile phone message.

“It is fairer since all companies must follow a set of rules such as voting, timing, pricing, etc. released by the PSE,” he added.

The PSE crafted the new delisting rules in response to complaints on the delisting of Melco Resorts and Entertainment (Philippines) Corp. and Travellers International Hotel Group, Inc.

“PSE revisited the voluntary delisting rules following the 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 when the draft rules were released in December 2019. — Revin Mikhael D. Ochave