20-33% Public Float depending on Market Cap; PSE raises minimum public ownership

Companies debuting on the Philippine Stock Exchange are now required to bring to public hands at least 20 percent to 33 percent of their total shares, depending on market capitalization.

A minimum public ownership requirement of 20 percent will apply to companies applying for initial public offering (IPO), backdoor-listing or listing by introduction effective immediately, the PSE announced in a memorandum on Tuesday.

The increase in public ownership from the previous minimum requirement of only 10 percent has been mandated by the Securities and Exchange Commission (SEC), which believes this would be necessary to increase market depth, improve market efficiency, reduce volatility and lead to better price discovery.

Based on a memorandum issued by PSE president Ramon Monzon on Tuesday, a three-tiered minimum public ownership requirement will take effect. The requirement will decrease the larger the market capitalization of the company is.

For companies applying for IPO with market capitalization of over P1 billion, the minimum requirement is 20 percent or P250 million, whichever is higher.

For companies with market capitalization over P500 million to P1 billion, the minimum public ownership should be 25 percent or P100 million, whichever is higher.

A minimum of 33 percent public ownership or P50 million, whichever is higher, will be required for companies with market capitalization below P500 million.

Based on the memorandum, the company must maintain a public ownership level of at least 20 percent at all times after initial listing.

Any company applying for listing by way of introduction or backdoor listing is required to have at least 20 percent public float upon and after listing.

By: Doris Dumlao-Abadilla - Reporter / Philippine Daily Inquirer

Source: Peso Economics