PSE asks SEC to hold public hearing on tender offer rule

The Philippine Stock Exchange (PSE) has asked the Securities and Exchange Commission (SEC) to conduct a public hearing on the proposed amendments to its tender offer rule in view of the perceived implications on the country’s business environment.

"We understand that the SEC is in the process of reviewing its rule on tender offers. In this regard, we would like to inform you that a revision of the existing rules on tender offers could have a negative impact on investments in the country, in general," PSE president Francis Lim said in a letter to the SEC.

Lim said the SEC should conduct a public hearing to provide all interested parties with the opportunity to present their views and recommendations.

Under the proposed amendments, the SEC is planning to revert to the 15 percent threshold that will trigger a mandatory tender offer for all the remaining shares of a listed corporation.

In view of the rush of mergers and acquisitions among listed companies, the SEC is contemplating on the tender offer rule as provided under the Securities Regulation Code.

Rule 19 of the SRC states that acquisitions involving 15 percent of any class of security of a listed corporation or of any corporation with assets of at least P50 million and having 200 or more stockholders shall be subject to a mandatory tender offer.

The prospective buyer must buy the shares at the same terms offered the seller.

At present, only acquisitions involving 35 percent are covered by the mandatory tender offer rule. The Commission raised the tender offer threshold to 35 percent since the 15 percent level was deemed to high by listed companies.

The original rule was said to discourage acquisitions among listed corporations and drive away foreign investors.

The tender offer rule as stated under the SRC also applies to creeping acquisitions involving at least 30 percent of a listed company over a period of 12 months.