SEC postpones higher public float rule

The Securities and Exchange Commission (SEC), the corporate regulator, is postponing the higher public float requirement for companies that are already listed in the market given the prevailing market conditions.

However, the new entrants have already been slapped a higher public float of 20 percent from the previous 10 percent.

In a recent interview, SEC chairperson Teresita Herbosa said the commission is still studying when the higher public float would be imposed for existing listed companies.

“We have to put it off because the market is down,” Herbosa said.

Last year, the SEC doubled the minimum public float requirement for listed companies to 20 percent from 10 percent for new market entrants after putting this off several times given the prevailing market conditions.

Eventually, the SEC would like to raise the public float to 25 percent, 30 percent, and then to 35 percent.

issued and outstanding shares of the company are considered strategic and, thus, excluded in the public float of the company.

The minimum public ownership (MPO) of a company shall be measured by its minimum public float.

The SEC warned that non-compliance of the minimum public ownership requirements may result to publicly listed companies being subjected to the administrative sanctions provided under Section 54 of the Securities Regulation Code.

Furthermore, they may also be subject to higher tax rate.

This is because, according to the Bureau of Internal Revenue (BIR), all publicly listed companies are required, at all times, to maintain a minimum public ownership (MPO) as prescribed by the SEC to enjoy preferential tax treatment.

So far, no new companies have braved the stock market this year given the prevailing volatility. Volumes have been relatively thin, trading at the 7,500 level the past several months after soaring above the 8,000 mark last year.