SEC refuses extension of 10% minimum public float deadline

Posted at 12/18/12 8:58 AM

MANILA, Philippines - The corporate regulator has thumbed down the requests of several listed firms, including that of San Miguel Brewery Inc. (SMB), to extend the year-end deadline for the minimum 10-percent public float requirement of the Philippine Stock Exchange (PSE).

Listed firms whose public ownership is still below the minimum after December 31 this year will be immediately suspended and will be delisted effective July 1 next year if the float deficiency remains unaddressed, a previous PSE memorandum posted on December 7 showed.

The trading of their shares will also be subjected to higher tax charges, based on a new regulation of the Bureau of Internal Revenue (BIR).

In separate filings on Monday, SMB (public float 0.6 percent), Gotianun-led holding firm Filinvest Development Corp. (3.35 percent), Maybank ATR KimEng Financial Corp. (0.89 percent) and San Miguel Properties Inc. (0.06 percent) said they received letters from the PSE informing them that the Securities and Exchange Commission (SEC) has denied their requests for an extension.

The firms are part of the 25 companies that have yet to meet the minimum float requirement as of December 7. But other companies have been moving to comply.

On Monday, Lucio Tan-led holding firm LT Group Inc. said its majority shareholder, Tangent Holdings Corp., sold shares on Friday. Data from the PSE showed that 508.54 million shares were sold at a little over P13 per share.

The move increased LT Group’s public float of just 4.7 percent to 10.4 percent. LT Group had also requested an extension to the deadline but this was rejected by the SEC, a source said.

With the PSE and SEC standing firm on their decision not to extend the deadline, erring companies have no choice but to comply or go for delisting, either voluntarily or involuntarily.

Some have taken the voluntary route; Eton Properties Philippines Inc., First Metro Investment Corp. and Metro Pacific Tollways Corp. (MPTC) have filed for their respective delistings and have conducted the necessary tender offers.

First Metro, the investment banking unit of the Metrobank Group, and MPTC, which operates North Luzon Expressway, will be delisted effective December 21, a PSE memorandum on Monday showed.

In the meantime, more share offers are likely to occur in the coming days. Filinvest Development President Josephine Yap said the firm will comply before the PSE’s deadline while similar statements were made by Maybank ATR.

San Miguel Corp. (SMC) President Ramon S. Ang did not immediately respond to a text message when asked about the group’s plans for SMB and San Miguel Properties in terms of complying with the PSE public float requirement.

Ang earlier said SMB may opt to delist since neither of the beer maker’s two major shareholders, namely, SMC and Japan’s Kirin Holdings Co. Ltd., which own over 99 percent of SMB, are interested in cutting their respective stakes.

Another SMC unit, PAL Holdings Inc., which operates flag carrier Philippine Airlines, is also short of the PSE requirement with a public float of just 2.3 percent. Last month SMC sold shares in San Miguel Pure Foods Co. to allow the food unit to comply with the PSE requirement.

The PSE’s minimum float rule was meant to address liquidity issues in Philippine stocks and also to appease the BIR, which said trading of noncompliant firms after December 31 will be subjected to capital gains tax and documentary stamp tax (DST).

This means a capital gains tax equivalent to 5 percent of the net capital gains amounting to not over P100,000 shall apply while a 10-percent capital gains tax will apply on the excess. Also, a DST of

P0.75 on each P200 of the par value of the stock will also be applied on the sale.

At present, trading of shares are subject only to a stock transaction tax equivalent to 0.50 percent of the transaction value levied on the seller.