The Philippine Stock Exchange (PSE) saw an improvement to 33.4 percent of the combined public float level of listed companies, signifying a continued compliance on the bourse’s minimum public ownership (MPO) rule among publicly listed firms.
PSE, in its recent study, reported that following the increase in the number of companies complying with the MPO level of 10 percent, the free float level in the local stock market also increased to 33.4 percent as of the first quarter of 2013.
The 10-percent MPO rule was imposed by the PSE to help improve liquidity and increase public participation in the local capital markets.
From a total of 45 non-MPO compliant companies by the end of 2011, there are now only six companies that have yet to meet the minimum public float rule requirement of the exchange, with one company currently in the process of delisting.
“Overall, our assessment is that the minimum public ownership program of the PSE has been successful. The figures show that not only is there lesser non-MPO compliant companies, the program has also proved to increase the shares in the hands of public shareholders,” said Hans Sicat, PSE president and chief executive officer.
According to the PSE, at the end of 2011, shares in public hands represented 30 percent of total domestic market capitalization.
The increase in the share of market free float also represents an estimated additional P400-billion worth of shares being owned by public shareholders.
Under the reinstated MPO rules of the PSE, companies that fall below the 10-percent minimum by the end of June this year shall be delisted from the roster of listed companies in the bourse.
This year, three non-MPO companies have opted for voluntary delisting while some are still working on complying with the MPO rule over the next six weeks.
As of end of April, the free float level of six companies, Philcomsat Holdings Corp. (9.60 percent), Southeast Asia Cement Holdings Inc. (2.41 percent), Cosmos Bottling Corp. (1.79 percent), Nextstage Inc. (1.20 percent), PAL Holdings Inc. (0.55 percent) and PNOC Exploration Corp. (0.21 percent), still fall below the required level.
“By and large, the reinstatement of the MPO rule has achieved the goals both from the governance perspective and the objective to increase liquidity in the market,” Sicat said.
“Moving forward, we will continue to assess the optimal level of the MPO requirement for listed companies in line with industry standards and the needs of the market,” he added.
Even as the MPO level is pegged at 10 percent, the PSE moved in 2011 to set a higher MPO requirement of 12 percent for companies to be considered for inclusion in the main index.