PSE tightens listing rules
The Philippine Stock Exchange ( PSE) has tightened the requirements for listing on its main board and a new trading platform that will replace the existing second and small and medium enterprise (SME) boards.
“The consolidation of the listing boards is aligned with international best practices on trading boards of bourses in the region. It also provides a clearer classification of listed stocks that will help investors evaluate business prospects of companies belonging to these listing boards,” said Hans B. Sicat, PSE president and chief executive officer.
The new version of the draft rules is also geared towards transforming the current SME board to represent emerging companies. The new SME board shall now stand for small, medium and emerging companies, which will require applicants to have an authorized capital of P100 million and at least three years of operating history.
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.
“We need to strike a balance between our role as a venue for capital raising even for smaller-sized companies and the need of our investors to have access to companies that have the track record to back up their growth prospects. We believe this latest version will help achieve this objective,” Sicat pointed out.
The PSE has likewise drafted a new set of rules for companies intending to list on the main board. Applicants must have an authorized capital of at least P500 million and at least three years of operating history. These companies should also have an EBITDA of at least P50 million for the last three years prior to listing. They must also have positive EBITDA and stockholders’ equity for the immediately preceding fiscal year.
Currently, companies that want to list via the first and second boards should have an authorized capital of P400 million and P100 million, respectively.
The first board requires at least a three year track record of profitable operations while the second board requires at least a one year operating history prior to the listing application.
According to the PSE, the proposed rules also make it easier for companies initially listed on the SME board to graduate or become part of the main board by removing the five-year gestation period required for SME listed companies before they can move to a higher board.
“The idea of listing is to help a company achieve its goals to expand and grow bigger. So if a company achieves this goal in a year or two upon listing, we should open that venue for them to be part of the higher board should they desire so,” Sicat explained.
Listing on the main and SME boards will include certain proposed restrictions. For the main board, no secondary offering during its IPO will be allowed when a relaxed track record and operating history are applicable such as in the case of mining, oil and renewable energy firms.