The Securities and Exchange Commission (SEC) on Thursday exercised exemptive relief, allowing companies to go public and offer under an initial public offering (IPO) only 15 percent of their equity structure instead of the mandatory 20 percent. But those seeking exemption meet a strict criteria. This temporary exemption comes amidst concerns of market liquidity but subject to the condition that companies must increase their public float to 20 percent within 24 months from listing.
The SEC remains firm on the 20 percent minimum float requirement, emphasizing its importance in enhancing market liquidity, improving price discovery, and reducing opportunities for market manipulation. The decision aims to address current market constraints while maintaining long-term regulatory standards to ensure the stability and integrity of the Philippine capital market.
This new provision applies to companies seeking IPOs already accepted by the SEC and the Philippine Stock Exchange (PSE). As of 25 March, no applicants have yet sought this regulatory relief.
The decision could benefit large companies such as Globe Fintech Innovations Inc. (Mynt) which earlier asked for a reduction in its own float due to perceived difficulty in observing the 20 percent requirement under current market environment.
While this exemption provides flexibility for large IPOs like Mynt, which is targeting a valuation of USD8 billion, the PSE highlights the need to resolve concerns on the impact of such listings on the Philippine Stock Exchange index, where companies with less than 20 percent public float are excluded.
The regulatory relief, while temporary, underscores a careful balancing act between encouraging new listings and maintaining stringent rules for market fairness and liquidity. The decision is seen as a temporary measure, aimed at alleviating current liquidity challenges without compromising long-term markets, observers said.
