PSE eyes changes to listing rules


By Denise A. Valdez, Senior Reporter

THE Philippine Stock Exchange, Inc. (PSE) is proposing to require companies that will list shares on its main board to have a minimum P75-million three-year cumulative net income, replacing the minimum capitalization requirement.

The bourse operator released late Wednesday its proposed revisions to the listing rules of the main board and the small, medium and emerging (SME) board. The new rules are aimed at increasing the local market’s competency against regional peers.

Under the proposal, the PSE will give leniency to companies planning to list shares on the main board by removing the P500-million minimum market capitalization requirement.

It will focus on net income, instead of EBITDA (earnings before interest, taxes, depreciation and amortization), as a measure of profitability to protect investors. Companies that will be doing an initial public offering (IPO) must have a cumulative net income of P75 million for the three fiscal years before its listing application. Its net income in the latest fiscal year must also be at least P50 million.

The PSE is likewise proposing the imposition of a minimum total stockholders’ equity of P500 million to gauge the financial condition of a company.

For those listing under the SME board, the regulator is proposing to remove the requirement of a positive EBITDA in at least two of the last three fiscal years before a filing application. Instead, it is proposing to qualify an applicant if its cumulative operating revenues are at least P150 million in the last three years, with at least 20% average operating revenues growth rate over the last two years.

It will also reduce the number of years that a company has to be operational to two years from three years, and replace the requirement for a P100-million minimum authorized capital stock with a P25-million paid-up capital.

The PSE likewise wants to prohibit backdoor listing for companies that are listed on the SME board. In exchange, it will remove the restriction against changing the primary purpose and secondary purpose of companies seven years from listing.

Due to the coronavirus pandemic, IPO applications filed in 2021 and 2022 may be afforded some “time-bound relief.” The PSE may check a company’s profitability during any two fiscal years in the three most recent fiscal years and exclude the year when the coronavirus impact was felt.

The draft rules are available on the PSE website and open for public comment until Oct. 7.

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