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SEC eyes five-year grace period for higher float

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Market volatility has prevented the corporate regulator from increasing listed firms’ minimum public float.

THE SECURITIES and Exchange Commission (SEC) is looking at giving listed firms five years to comply with the planned increase in minimum public ownership (MPO), a senior regulatory official told reporters on Tuesday.

“We’ll probably allow a five-year compliance period. The idea is, rather than try to catch the market… ang thinking is give them sufficient time kasi may concerns on market volatility,” SEC Commissioner Ephyro Luis B. Amatong told reporters on the sidelines of the Sustainable Finance Dialogue Forum in Makati on Tuesday.

The corporate regulator has long been planning to raise the MPO to 20% from 10% currently, a floor that has been in place since 2011. Its initial plan was to gradually raise the minimum public float to 15%, before the full target of 20%.

Mr. Amatong noted “[t]here will be many companies that will have to issue in order to comply with the 20%, some of them very big companies. So ’yun ’yung pinag-uusapan na approach (so that’s the approach we’re looking at).”

In a 2017 briefing, the SEC said that 68 out of 264 publicly listed firms had a public float lower than 20%. Of these, 39 companies had an MPO of less than 15%.

The same presentation showed that the stock exchange can raise more than P130 billion should the firms comply with the 20% MPO. That estimate was based on stock prices at a time when the PSE index was trading at the 7,800 level — the same level it is moving in now.




Despite talks of implementing the five-year compliance period, Mr. Amatong declined to give a timetable on the release the final rules.

He said the corporate regulator will first have to issue the revised guidelines for Real Estate Investment Trusts, or REITs, within this quarter.

The commission initially targeted to implement the plan by 2020.

So far, it has already required firms seeking to conduct an initial public offering to comply with the 20% MPO through a memorandum released in November 2017.

The only company that was affected by the new rule was DM Wenceslao & Associates, Inc., which was the sole firm to have braved the stock market in 2018 amid market volatility. — Arra B. Francia