BusinessMirror

Grace period granted to companies affected by merger of PSE boards

THE Philippine Stock Exchange (PSE) is allotting a grace period for listed companies that suddenly find themselves noncompliant with the more stringent requirements arising from the planned merging of the first and second listing boards into a single “main” board.

PSE president Han Sicat told reporters on Friday that the companies will be given “at least a year or more” to the meet the rules for the proposed main board.

The comment period for the proposal ended on October 2 and the PSE is in the process of consolidating feedback from market participants and, if applicable, make the necessary modifications, Sicat said. The PSE will also need the approval of the Securities and Exchange Commission for this matter.

The PSE is cutting down what used to be three listing boards—the First Board, Second Board and SME Board—into just two. This means the Main Board and SME [small, medium and emerging] Board will emerge as the only avenues for listing.

The bourse said earlier the plan is in line with the two listing board structures followed by other exchanges.

Under the new rules, main board initial public offerings will have no secondary components when “a relaxed track record and operating history are applicable such as in the case of mining, oil and renewable energy firms.”

It gets tighter for SME firms, which are banned from selling secondary shares during an IPO and are not allowed to change their primary purpose while listed on this board.

An SME company will also be automatically delisted if it has negative stockholders’ equity for three consecutive years, the rules said.

The PSE balanced this out by making it easier for SME-listed companies to “graduate” to the main board by removing the five-year gestation period before they are allowed to move to a higher board.

Under the PSE’s proposed rules, companies that will list on the main board should have an authorized capital stock of at least P500 million, and at least three years of operating history.

These companies should also have cumulative earnings before income tax, depreciation and amortization (Ebitda) of at least P50 million for the last three years prior to listing.

SME companies should have an authorized capital stock of P100 million and at least three years of operating history.

To accommodate more potentially viable emerging companies to list, the profitability test was adjusted under the new version of the draft rules.  Companies should have positive earnings for two of the last three years and no negative stockholders” equity for the immediately preceding fiscal year.

The requirement for cumulative earnings Ebitda of at least P15 million for the last three years was maintained.