By Revin Mikhael D. Ochave, <\/b>Reporter <\/i><\/p>\n
THE Securities and Exchange Commission (SEC) is considering a tiered method <\/span>for the minimum public float stipulation<\/span> for firms seeking to list on the stock exchange, according to its chairperson.<\/span><\/p>\n SEC Chairperson Francisco Ed. Lim mentioned that the existing 20% minimum public float criterion for companies intending to conduct an initial public offering (IPO) represents a \u201cone-size-fits-all\u201d scenario that could benefit from a tiered framework based on the company\u2019s market capitalization.<\/p>\n \u201cA 20% float at IPO, regardless of the size of the offering, was implemented to enhance market liquidity, which is one of the fundamental issues. However, I believe the 20% (float) is a \u2018one size fits all.\u2019 Personally, I don\u2019t view that as the optimal approach,\u201d Mr. Lim remarked in an interview <\/span>set to be broadcast on One News\u2019 Thought <\/i>Leaders with Cathy Yang<\/i> on July 25. <\/span><\/p>\n Mr. Lim stated he instructed the overseeing SEC commissioner to examine tiers contingent on the firm\u2019s market capitalization.<\/p>\n \u201cThe greater the market capitalization, the smaller the percentage of free float,\u201d he noted.<\/p>\n Mr. Lim indicated that the SEC will have internal discussions on the proposal but will also seek opinions from the Philippine Stock Exchange (PSE) and the public.<\/p>\n \u201cI believe this has been adopted by other exchanges. Let\u2019s observe the outcome,\u201d he stated.<\/span><\/p>\n Mr. Lim asserted he is not in favor of granting exemptive relief from the current 20% public float requirement.<\/span><\/p>\n \u201cI\u2019m quite averse to exemptive relief,\u201d he added.<\/p>\n Mr. Lim explained that the tiered approach ensures the rule is applicable to all firms, in contrast to exemptive relief, which is allocated on a case-by-case basis.<\/p>\n \u201cJust modify the rule to make it applicable to everyone rather than favoring a specific company, because once you do that, other companies will present their own reasons for why they should be granted exemptive relief,\u201d he said.<\/p>\n In March, the SEC, then led by chairperson Emilio B. Aquino, announced that companies may apply for exemptive relief from the 20% public float regulation \u201cprovided they bridge any gap from the 20% standard within less than 24 months from the listing date and only as <\/span>considered necessary by the commission.\u201d<\/span><\/p>\n The SEC initially permitted a minimum public float of 15% through exemptive relief, though subject to stringent criteria.<\/p>\n Nonetheless, the regulatory body \u201cremained steadfast\u201d on the 20% minimum public float requirement for firms looking to undertake an IPO, emphasizing the \u201cimportance of higher public ownership to market depth and eff<\/span>iciency.\u201d<\/p>\n The SEC\u2019s initiative came as Globe Telecom, Inc. stated that the long-anticipated IPO of GCash, overseen by Globe Fintech Innovations (Mynt), will hinge on regulators reducing the mandated public float to 10%-15%. <\/span><\/p>\n In 2017, the commission raised the minimum public ownership criterion for companies aiming to conduct an IPO to 20% from the earlier 10%.<\/p>\n AP Securities, Inc. Research Head Alfred Benjamin R. Garcia conveyed in a Viber message that the tiered system would benefit companies aspiring to go public.<\/p>\n \u201cThat would be a more effective approach than exemptive relief, as the latter appears too much like favoritism. It also makes logical sense as it translates the percentage into peso amounts, thus keeping the end result aligned with the objective of ensuring liquidity,\u201d he remarked.<\/p>\n \u201cAt least Mr. Lim seems to prioritize actual shareholder welfare over adjusting the rules to accommodate specific companies,\u201d he added.<\/p>\n Unicapital Securities, Inc. Research Head Wendy B. Estacio-Cruz stated in a Viber message that the tiered strategy provides a \u201cmore pragmatic and inclusive avenue to promote IPOs.\u201d<\/p>\n \u201cIt presents a clearer and more foreseeable pathway for companies that might struggle to meet the 20% threshold immediately. Simultaneously, it supports the goal of enhancing market liquidity without being excessively rigid,\u201d she noted.<\/p>\n