The Securities and Exchange Commission has approved a new listing framework introduced by the Philippine Stock Exchange (PSE) to relax certain requirements to encourage more companies to go public.
In a forum with the Financial Executives Institute of the Philippines on Wednesday, SEC Chairman Emilio Aquino said the SEC had approved the amended PES listing rules as one of the measures to compare the regulations of companies with Asean-6, referring to the six largest economies in the country. Association of Southeast Asian Nations: Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam.
Aquino said the new framework will address constraints on the list of businesses, especially small and medium-sized enterprises (SMEs).
We have checked the practices of Bursa Malaysia, SGX (Singapore Exchange) and the Thailand stock exchange just to make sure we are on par with them, he said. We may not be able to be as tough as Singapore, but I think we have a good chance with Malaysia and Thailand.
In the case of Malaysia, Aquino said its stock market has so many listed companies because there are many public entities registered as well.
Philippine companies are on par with our neighbors in Asean in terms of corporate governance, he said. Citing a regional ranking unveiled in Kuala Lumpur, Aquino said the Philippines had nine of Asia’s top 50 companies in terms of corporate governance.
To date, the local stock market is at the bottom of the abyss when it comes to listing activity. There are only 271 companies listed in the PSE, compared to 932 in Bursa Malaysia, 691 on the Indonesian Stock Exchange, 716 on the Singapore Stock Exchange and 724 on the Thailand Stock Exchange. Vietnam has 357 companies on the Hanoi Stock Exchange and 380 others on the Ho Chi Minh Stock Exchange.
Aquino wants to bring more companies to the stock market. That’s why we approved the amended listing rules to lower the requirement for profitability and balance sheet, he said.
The PES had proposed to relax listing rules and offer time-limited relief for IPO applications this year or 2022 due to the COVID-19 pandemic.
For the SME council, the PES had proposed to remove the requirement of positive earnings before interest, taxes and depreciation (Ebitda) for at least two of the three years before the application for registration.
For the main board, the PES wanted to remove the minimum market capitalization requirement of 500 million pesos. However, applicants on the list must have recorded a cumulative net income of 75 million pesos in the last three fiscal years and a net income of at least 50 million pesos for the fiscal year immediately preceding the filing of the application.
The PES intends to use net income, instead of EBITDA, as an indicator of profitability, in line with Southeast Asian standards.
At the time of going to press, however, the PES has yet to see the final framework approved by the SEC. DORIS DUMLAO-ABADILLA
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