PSE approves consolidation of listing boards

Posted at 09/16/2012 11:47 PM | Updated as of 09/16/2012 11:47 PM

MANILA, Philippines - The Philippine Stock Exchange (PSE) board has approved the proposal to consolidate its listing boards under the current first, second and small and medium enterprises 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. We thank the various stakeholders for giving very useful comments on the earlier version of the draft rules," PSE president and CEO Hans B. Sicat said, in a statement.

The PSE is again submitting for public comments the new draft rules to govern these listing boards, since there are changes in the listing requirements. After getting the comments, the PSE will submit it to the Securities and Exchange Commission (SEC) for approval.

Under the proposed rules, companies that will list on the "main" board should have an authorized capital stock of at least P500 million, and has been operating for at least 3 years. They should also have cumulative earnings before income tax, depreciation and amortization (EBITDA) of at least P50 million for the last 3 years prior to listing. They should also have positive EBITDA and stockholders’ equity for the immediately preceding fiscal year.

At present, companies that list on the first and second boards should have an authorized capital stock of P400 million and P100 million, respectively. The first board requires at least 3 years of profitable operations while the second board requires at least a 1 year operating history prior to the listing application.

The PSE's draft rules are aimed at transforming the SME board to also cover emerging companies, which have an authorized capital stock of P100 million and at least three years of operating history. Under the new rules, companies should have positive earnings for two of the last three years and no negative stockholders’ equity for the immediately preceding fiscal year. However, the requirement for cumulative earnings (EBITDA) of at least P15 million for the last 3 years remains.

"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 said.

The proposed rules are also making it easier for companies on the SME board to become part of the main board, since it removed the 5-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 said.

At present, companies that will list on the SME Board are required to have at least P20 million in authorized capital stock. SME companies are also subject to a one year operating history prior to their application for listing.