Minimum public float rule makes a comeback

CORPORATE REGULATORS have approved the reinstatement of the 10% minimum public ownership rule as a requirement for continued listing.

The rule, which was revoked in 2005, will take effect at the end of next month, the Philippine Stock Exchange (PSE) said in a memorandum posted in its website yesterday.

"Listed companies shall, at all times, maintain a minimum percentage of listed securities held by the public of 10% of the listed companies’ issued and outstanding shares, exclusive of any treasury shares," the PSE said.

Reinstatement of the rule was recommended last January by the PSE board to the Securities and Exchange Commission.

"A listed company that does not comply with the prescribed minimum percentage shall be allowed a grace period of 12 months to comply," the PSE said.

Erring firms will be slapped with penalties.

Listed companies with a public float of 5% and below will be penalized with an amount twice the annual listing maintenance fees (ALMF) for the first year of noncompliance after the grace period, 2.25 times the ALMF during the second year and 2.5 times the ALMF if noncompliance extends to three years.

The ALMF for first board firms is equivalent to 1/100 of 1% of market capitalization but will not be less than P250,000 or not more than P2 million. That for those listed as small and medium enterprises is P100 for every P1 million of market capitalization; not less than P50,000 and not over P250,000.

For companies with public floats of less than 10% but more than 5%, the penalties are 2.5 times the ALMF for the first year after the grace period, 2.75 times the ALMF for two years and thrice the ALMF for three years.

Trading suspensions and delisting will result for noncompliance past three years.

Listed firms that are currently non-compliant include Petron Corp. (9.4%), San Miguel Pure Foods Co., Inc. (0.1%) and San Miguel Brewery, Inc. (0.6%).