SEC greenlights easier IPO rules

MANILA, Philippines — The Securities and Exchange Commission (SEC) has approved the Philippine Stock Exchange’s move to relax the rules for initial public offerings this year and in 2022 in consideration of the negative impact of the COVID-19 pandemic on companies.

In a memorandum to brokers, the PSE said it received the green light from the SEC to  grant temporary relief to companies applying for initial listing whether at the main or SME board.

Measures include time-bound relief which will cover IPO applications that will be filed in 2021 and 2022.

“The PSE, on a case-to-case basis, may consider the profitability of the applicant for any two fiscal years in the three most recent fiscal years, excluding the year of the impact,” the PSE said.

For an IPO application filed in 2021 by a company demonstrating the negative impact in its financial condition and results of operations for 2020 due to COVID-19, the two most recent fiscal years shall be 2018 and 2019, the PSE said.

Thus, if the application is filed in 2022 and the year of the impact is 2020, the two most recent fiscal years shall be 2019 and 2021.

The PSE also required a disclosure of the impact of COVID-19 on the business of the company intending to list at the local bourse.

“The applicant should fully disclose in the prospectus (with cross reference to the audited financial statements) the adverse impact of the pandemic on its operations, expected duration of the business effects of the pandemic, recovery measures, and business prospects of the applicant in the next five years, among others,” the PSE said.

“The PSE shall determine the suitability of the applicant to be listed with due consideration to the adverse effect of the pandemic and the applicant’s recovery measures. In this regard, the latest interim financial statements of the applicant, when available, will be considered in the evaluation of the applicant’s prospects of recovery from the pandemic,” the PSE said.

Only one company  Double Dragon Properties’ DDMP REIT has so far listed this year.