Corporate regulator eyes midyear for higher public float requirement

THE SECURITIES and Exchange Commission (SEC) plans to raise by midyear the minimum public ownership requirement for companies applying to join the local bourse, in turn forcing Eagle Cement Corp. to tweak its offer size.

SEC Chairperson Teresita J. Herbosa told reporters last week that the regulator can issue the memorandum order requiring listing applicants to sell at least 15% of their issued and outstanding common shares — compared to the current 10% minimum —as early as this month, to “take effect immediately for new IPOs.”

“If there’s an application, the reckoning date is the date of approval of the registration statement and whatever conditions we put there will apply,” she said.

That may affect Eagle Cement, which is selling 500 million common shares, or just 11.5% of its outstanding capital, to the public in a P9.20-billion maiden share sale targeted in May.

“We will be firm in requiring new IPOs to be at least 15%,” Ms. Herbosa said.

Vicente Graciano P. Felizmenio, director of the agency’s Markets and Securities Regulation Department, said it should be not be a problem as Eagle Cement can just sell more shares to meet the new rules. Eagle Cement, which is owned by San Miguel Corp. Chief Operating Officer Ramon S. Ang, declined to comment until the final SEC rule and its implementing guidelines are released.

The SEC had wanted to hike the minimum public float requirement for new listings as early as last year, but adverse market conditions prompted the regulator to delay the action.

Ms. Herbosa wants the minimum public float requirement raised to 20% before ending her seven-year term in May next year, as part of efforts to encourage more Filipinos to participate in the capital markets.

The SEC and PSE had long said the minimum public float could rise further after they reinstated the 10% floor in 2011 in a bid to improve liquidity and increase public participation in the local equities market.

As the deadline for compliance expired in June 2013, state-run PNOC Exploration Corp. was the lone company that failed to meet this requirement. Consequently, its shares were delisted from the bourse.