The Philippine Stock Exchange Inc. (PSE) is set to come up with the rules that would govern public-private partnership securities before the national elections on May 9, saying that the rules primarily aim to protect ordinary and institutional investors.
Roel Refran, PSE chief operations officer, told reporters that the Exchange expects to publish the PPP securities rules before the elections next month in order to solicit comments from the public.
Thereafter, he said the proposed rules would be submitted to the Securities and Exchange Commission for approval.
“Hopefully before the elections, we would be able to publish the rules both in the hard [printed form]and soft copy for public comment. Then we will submit the same along with the revisions [if any]before the SEC for approval,” Refran said.
Refran noted that the rules will not merely be limited to PPP-related securities but would likewise govern equity investments relating to general infrastructure businesses.
“Essentially, the gist of the rules is that they would contain minimum requirements for investor protection. For example, for a 30-year [PPP] project that would have a five-year life to go after that period, we would provide an extension for that remaining five years,” he said.
The executive explained that the extension of the life of the project or its corporate life is aimed at ensuring that the project for which the PPP securities are issued will have ample time to wind up its affairs, and would not be subject to involuntary delisting.
“Because normally, if the project’s life ends it will be delisted from the main board. We allow voluntary delisting, but under certain conditions. However, if it ends its life without us providing for an automatic extension, then it would be subjected to involuntary delisting. We do not want that as it could leave the investors hanging,” Refran said.
He said that PSE is conducting a comparative study on the duration of life extension of PPP securities by looking at other countries’ jurisdictions.
“We are still studying the duration of the extension. We would still compare it to other countries’ jurisdictions,” he said.
Last month, Refran said that the PPP securities will be attractive to retail investors.
Such securities he said are much easier to monetize in the open market in the same fashion as ordinary securities, compared to over-the-counter securities that are not quoted and are relatively illiquid as a result.
The PPP securities will be offered in the form of stocks, and will be taxed at a rate similar to registered and traded stocks in the stock exchange at one half of 1 percent.
Meanwhile, Hans Sicat, president and chief executive officer of the PSE, said that although the proposed PSE-PDS Holdings Inc. merger was disapproved by the SEC, the PSE could nonetheless issue PPP securities in the form of bonds.
“I am just saying that part of our license is to issue bonds. Thus, we are not precluded from issuing PPP bonds,” Sicat said without confirming whether the PSE would also offer PPP securities in the form of bonds.
PPP securities will be offered both to retail and institutional investors by corporations, including joint ventures, partnerships and consortiums that have won PPP projects.
Among such groups are AF Payments Inc., Light Rail Manila Corp., and GMR-Megawide.