PSE fines 38 companies for late Q1 filings

Of course I’m not advocating for the PSE to come down so hard on late filers that it financially devastates, but with such a huge portion of the PSE’s companies filing late, it might be an indication that companies look at these fines more as transaction fees to be paid for a few extra days rather than as deterrents to be avoided.
Merkado Barkada

The Philippine Stock Exchange [PSE 200.00 3.85%] [link] announced that 38 companies have been sanctioned for their failure to submit Q1 earnings reports by the May 16th deadline.

The fine scales in accordance with the company’s total assets, ranging from P5,000 for the PSE’s smallest companies to P50,000 for the PSE’s very largest.

If the companies listed don’t submit their reports by the 26th (10 calendar days following the deadline), the PSE will start to issue daily fines that range between P500 per day for small companies to P5,000 per day for large companies.
 

MB BOTTOM-LINE

The fines are basically way more of a pain-in-the-ass than an effective deterrent.

For example, a company like Vistamalls [STR 3.21 0.31%], with total assets of P73 billion, is 73 times larger than the largest bracket cut-off in the PSE’s schedule of fines, and yet it pays the same as Fruitas [FRUIT 1.10 4.76%] will, with P1.5 billion in total assets, for its lateness.

I’m not picking on STR, but does anyone think that a company of that size, owned by the country’s richest person, is motivated at all by the deterrence factor of a {50,000 fine?

Advertising
Scroll to continue

That probably doesn’t even pay the hourly rate of the lawyer that drafted STR’s request for deadline extension disclosure. The purpose of forcing companies to report earnings by a certain date is to try and keep all the information up-to-date and accurate, as that’s all investors have to rely on to make informed decisions.

Of course I’m not advocating for the PSE to come down so hard on late filers that it financially devastates. Still, with such a vast portion of the PSE’s companies filing late, it might be an indication that companies look at these fines more as transaction fees to be paid for a few extra days rather than as deterrents to be avoided.

There are mechanisms in place that a company can use to request an extension, and a series of escalating consequences for continued non-compliance with the rules that could result in a trading suspension or, in extreme cases, delisting.

But I’m not concerned with the extreme cases, nor am I concerned with the legitimate problems that come up in the course of life that might prevent a timely filing. I’m just wondering out loud if the sheer number of penalized companies might inspire a re-think of the schedule of fines to keep our information timely and accurate.

--

 

Merkado Barkada is a free daily newsletter on the PSE, investing and business in the Philippines. You can subscribe to the newsletter or follow on Twitter to receive the full daily updates.
Merkado Barkada's opinions are provided for informational purposes only, and should not be considered a recommendation to buy or sell any particular stock. These daily articles are not updated with new information, so each investor must do his or her own due diligence before trading, as the facts and figures in each particular article may have changed.

Show comments