After the Securities and Exchange Commission said on Thursday that it will impose less strict foreign ownership rules, the Philippine Stock Exchange (PSE) countered that on Friday that it can only welcome market-friendly application on the said rules.

“It [PSE] will welcome a final resolution to the foreign ownership limit that will continue to be supportive of investments in the country,” the bourse said in a statement.

The bourse issued a statement in response to Thursday’s reports that the SEC may adopt more market-friendly rules than the draft rules issued for comments last year, which according to PSE President and Chief Executive Officer Hans Sicat said will limit foreign investments coming into the country.

“The mere signal of a direction towards imposing the foreign ownership restriction to common or voting shares appears to have been well-received by the market. It seems to also have had an immediate impact of supporting the upward movement of the market,” he said.

“We are hopeful that the government can issue rules or guidelines pertaining to foreign ownership that will not be deemed disruptive to investor behavior, while remaining faithful to the ruling issued by the Supreme Court in this matter,” he added.

The PSE earlier said that a strict redefinition of capital will reduce the country’s attractiveness to foreign capital, and adversely affect foreign direct investment and investments into the local capital market.

On Thursday, the SEC said that it is planning to formulate “less strict and easy to understand” foreign ownership rules, after the Supreme Court filed an Entry of Judgment pertaining to the definition of term “capital.”

“We do not want a rule that is difficult to implement,” SEC Chairman Teresita Herbosa said.
“We want to come up with rules that would lessen conflicts and controversies,” she added.

The entry of judgment of the High Court reads: “We partly grant the petition and rule that the term capital in Section 11, Article 12 of the 1987 Constitution refers only to shares of stock entitled to vote in the election of directors and thus the present case only to common shares, and not to the total outstanding capital stock [common and non-voting preferred shares].”