The Securities and Exchange Commission (SEC) is proposing a new tiered system for minimum public ownership (MPO) requirements for companies planning to go public. The draft rules, which are open for public comment until December 23, classify IPO applicants into five tiers based on their expected market value.
Under the proposal, Tier 1 companies with an expected market value of up to P500 million would need to offer at least 33 percent of their shares to the public. Tier 2 firms, valued at more than P500 million up to P1 billion, would be required to float 25 percent, subject to a minimum of P165 million. Tier 3 companies, valued at more than P1 billion up to P50 billion, would have a minimum float of 20 percent, or at least P250 million. For Tier 4, covering firms worth more than P50 billion up to P150 billion, the minimum float would be 15 percent, with a floor of P10 billion. Tier 5 firms valued above P150 billion would need to offer 12 percent to the public, provided the float is not less than P22.5 billion.
Post-listing, companies must maintain a minimum level of public ownership. Those in Tiers 1 to 3 would need to keep at least 20 percent in public hands, while Tier 4 companies must maintain 15 percent and Tier 5 companies 12 percent. If a company falls below the required level, it will have up to 12 months to restore compliance and must notify the SEC within 10 days, along with a time-bound plan to correct the deficiency.
Firms already listed before the new rules take effect will continue to follow the existing 20 percent maintenance requirement. The SEC said the adjustments aim to balance market liquidity, investor protection, capital formation, and overall market competitiveness amid shifting global IPO trends.
