THE Philippine Stock Exchange (PSE) has proposed to allow the initial listing of a company’s preferred shares without the need to list its common shares, a move which it expects to help in raising funds for businesses.
“There are companies which are already operating but prefer not to offer common shares until their full income earning potential is realized. Thus, PSE would like to offer these companies the option to tap the stock market for funding via the issuance of preferred shares, without the listing of their common shares,” the exchange said through a memorandum on Wednesday.
The local bourse said the proposal was inspired by foreign exchanges, which allow the listing of preferred shares on their own, such as the Singapore Exchange, Australia Stock Exchange, New York Stock Exchange, and the Taiwan Stock Exchange.
“The proposed rule will give issuers flexibility to structure a fundraising structure that is best suited to their business operations and strategies while providing the investing public the opportunity to participate in the economic benefits as shareholders,” the PSE said.
Under the proposal, a company must offer a minimum of P5-billion preferred shares to list them on the market.
Aside from the required minimum offering, existing rules under Article III, Parts A to F of the PSE Consolidated Listing and Disclosure Rules will apply.
The PSE also wants to set a minimum public ownership requirement (MPO) for the listing of preferred shares, instead of the existing 20% MPO requirement based on a company’s public outstanding and listed common shares.
“Upon and after listing, the applicant company shall have at least 1,000 public stockholders, each owning stocks equivalent to at least one board lot,” the local bourse proposed.
Owners of preferred shares may also exercise voting rights as stated in the Revised Corporation Code.
Companies initially listing only preferred shares may also offer common shares later on. However, it is not required.
The exchange is seeking comments on the proposal from interested parties. — Keren Concepcion G. Valmonte