Planned higher public float requirement to impact half of listed firms

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Moves to increase listed companies’ minimum public ownership requirement have always been thwarted by market volatility. -- BW FILE PHOTO

NEARLY HALF of publicly listed companies are expected to be affected by the doubling of the minimum public float requirement planned by the Securities and Exchange Commission (SEC), the bourse operator has said.

Ramon S. Monzon, president and chief executive officer of the Philippine Stock Exchange, Inc. (PSE), told reporters last week that at least 102 of the 268 listed firms will have to adjust their minimum public ownership (MPO) once the new rules come into effect.

“We have been pushing for this as an exchange… Ngayon naglabas sila 25% [Now the SEC has bared its plan to raise the MPO to 25%]. That’s very good for us,” he said.

Commissioner Ephyro Luis B. Amatong had said that the SEC is looking at setting the minimum public float at 20-25%, which listed companies must comply with within a five-year period, from 10% currently.

Mr. Monzon said five years is “good enough time” to get firms to comply with the new rule.

Should the lower end of the range be followed, 68 listed firms will be affected, of which two companies are part of the 30-member PSE index (PSEi): San Miguel Corp. with a public float of 15.94% and Aboitiz Power Corp. with 19.15%.

If the 25% MPO were adopted, four PSEi member firms will be affected, namely: Manila Electric Co. (20.98%) and Globe Telecom, Inc. (21.65%), aside from San Miguel and Aboitiz Power.

In a separate interview last week, SEC Commissioner Kelvin Lester K. Lee told reporters that the corporate regulator is targeting to settle the MPO hike plan before the year ends, saying: “We want to fix the issue within the year, as much as possible.”

The SEC has long been planning to raise the minimum public float requirement from the current 10% that has been in force since 2011, but has always been forced to put it on hold due to market volatility.

But those intending to conduct an initial public offering have had to have a 20% MPO since November 2017.

The SEC said a higher MPO requirement would help reduce the volatility of the market due to increased liquidity, reduce chances of price manipulation and encourage good corporate governance. — Denise A. Valdez