SEC approves rules on listing by introduction

The Securities and Exchange Commission (SEC) has approved the proposed rules of the Philippine Stock Exchange (PSE) on listing by way of introduction, making it now easier for companies mandated by law to undertake an initial public offering (IPO) to list their shares on the bourse.

Intro listing refers to the direct listing of a company’s shares without undertaking an IPO.

The rule shall only be allowed if any one of the following conditions exists:

• where listing in an exchange is mandated by law or by the SEC, in the exercise of its powers under the Securities Regulation Code.

• where securities for such listing is sought are already listed or traded or will simultaneously be listed on another exchange or is listed on another trading market.

• where the securities of an issuer are distributed by way of property dividend by a listed issuer to shareholders of that listed issuer.

• where a holding company is formed and its securities are issued in exchange for the securities of one or more listed issuers and the listing of the listed issuer or issuers is withdrawn at the same time as the securities of the issuer are listed.

These companies, however, are required to undertake a public share offering within one year from listing of its securities in the exchange.

In the event the issuer fails to conduct a public offering within the one year period, the exchange shall grant the issuer an additional 30 days within which to submit a detailed plan to offer its securities to the public including the detailed work program and timetable of activities.

Upon approval by the PSE board of the detailed plan, the exchange shall give the issuer an additional 60 days from the lapse of the 30-day period within which to implement its detailed plan to offer.

Suitability of applicant companies applying to list by way of introduction shall be based on the listing criteria established by the exchange for either the first board or second board. The exchange is however, not precluded from allowing a company which is mandated by law or by SEC to be listed in an exchange from being listed via this mode based on special listing criteria to be agreed upon by the PSE and SEC.

Under the rules, the exchange may not permit the listing by way of introduction when there is significant demand for the securities or if the law expressly requires the issuer to go public by way of a public offering.

In case the applicant will simultaneously list in another exchange, the applicant company must provide evidence to the exchange of its duly received application for a proposed listing, acceptance or provisional acceptance for listing on such exchange.

The company must also make arrangements for simultaneous disclosure and filing by facsimile or electronic means, of any information or material required to be filed or disclosed to the other foreign exchanges. Other arrangements may be made between the applicant company and the exchange with regard to other processes relative to the listing and disclosure.

The PSE itself is contemplating on the introductory listing of its shares this year to comply with the SEC’s directive under the SRC.