The Philippine Stock Exchange Inc. (PSE) is considering relaxing its disclosure rules this year to enhance the attractiveness of the country’s initial public offering (IPO) market, particularly for small and medium-sized enterprises (SMEs).
PSE president and CEO Ramon Monzon told The STAR the exchange is currently studying potential amendments to its disclosure rules, with the hope of encouraging more SMEs to list on the local bourse by next year.
‘The feedback we’re getting is that a lot of companies are intimidated by listing because there are a lot of rules-you have a lot of disclosure rules, you have to have very strong compliance because if you violate disclosure rules, you will be penalized immediately, since that is investor protection. So I told my IRD (issuer regulation division), let’s study and they’re doing that right now,’ Monzon said.
‘I gave them until the end of the year to revise our disclosure rules. We will get comments by November,’ he said.
To alleviate SMEs’ fear of listing on the local bourse, Monzon said the PSE aims to be more lenient on certain disclosure requirements, as long as the stock price of the listed company is not affected.
‘The problem is SMEs, of course, these are small companies, so it’s really going to be a problem for them to hire a top-rate compliance officer,’ he said.
Monzon, however, said that the aim is to ease up on disclosure rules ‘without losing sight of the investor protection.’
‘If a certain company has a violation, but it has no impact on the stock price.then maybe they would just get a slap on the wrist. But if you do that three or five times, then that’s a different story,’ he said.
Monzon said the move to relax disclosure rules is one of the bright spots that is expected to help boost the number of IPOs in the country by next year.
He said this would be further complemented by the planned issuance of enhanced rules on real estate investment trust (REIT) by the Securities and Exchange Commission (SEC).
The SEC is currently working on revised rules for Republic Act 9856, also known as the REIT Act of 2009, to expand the list of eligible assets, lengthen the reinvestment period, and attract broader participation.
‘According to (SEC chairperson) Francis (Lim), he wants it studied very well, and he wants the amendment to the REIT rules out by the end of the year. So that should open up a lot of potential REIT listing applicants,’ Monzon said.
‘These are the two things that we hope will help the IPO market by next year,’ he said.
The PSE was previously looking to double last year’s IPO number, with a total of six IPOs planned for 2025.
However, the country’s IPO landscape has been tepid so far, with only one public listing this year, courtesy of Top Line Business Development Corp., which raised P732.6 million from its IPO last April.
Maynilad Water Services Inc.’s P45.77-billion IPO is expected to be the second and final IPO for the country this year.
Maynilad targets a listing on the main board of the PSE on Nov. 7, with an offer period running from Oct. 23 to 29.
Monzon said that Maynilad is a welcome addition to PSE’s roster of listed companies.
He said the prospects of the IPO, which is one of the biggest maiden offerings in PSE history, have been bolstered by the numerous cornerstone investors that have agreed to support the capital-raising activity.
‘We hope this brisk demand from institutional investors will spark renewed interest and confidence in other companies to likewise tap the stock market for fundraising,’ Monzon said.