The Philippine Stock Exchange (PSE) sees more firms complying with its public ownership rule, after it said last week that it would suspend or delist companies that fail to do so.

The PSE recently announced that there was a significant improvement in the number of companies that have complied with the minimum public ownership (MPO) requirement, which demands companies to at least have a minimum of 10 percent of their issued and outstanding shares, exclusive of any treasury shares, held by the public.

“The MPO rule aims to provide a fair and efficient facility for price discovery and to ensure that sufficient liquidity exists in the stock market,” the local bourse said.

PSE memorandum dated December 21 shows that only a total of 12 listed companies remain non-compliant with the MPO requirement compared with the 25 listed companies that were on the list last December 7.

These companies have been given a grace period of up to December 31, 2012 to comply.

“Selling by principal shareholders of their holdings to the public has resulted in increased compliance with the MPO requirement. This is consistent with the intent of the rule to put more shares in the hands of the investing public,” PSE President and Chief Executive Officer Hans Sicat said.

“We have been receiving inquiries from investors on this issue and we continue to urge the investing public to remain watchful of developments on this matter,” he added.

The PSE has been regularly posting on its website the list of the non-MPO compliant companies.

Immediately after December 31, 2012, the exchange shall impose a trading suspension on the shares of non-compliant listed companies for a period of not more than six months or until June 30, 2013. If after June 30, 2013, a listed company remains non-compliant, the listed company’s shares shall be delisted.

“The Bureau of Internal Revenue, as contained in its recent rule issuance relating to the MPO rules, will impose capital gains tax and a documentary stamp tax [DST] on every sale, barter, exchange or other disposition after December 31,2012 of shares of listed companies which are not compliant with the MPO requirement,” the local bourse said.

After December 31, 2012, a capital gains tax equivalent to 5 percent of the net capital gains amounting to not over P100,000 shall apply while a 10 percent capital gains tax will apply on the excess.

Also, DST of P0.75 on each P200 of the par value of the stock will also be applied on the sale.

In contrast, shares traded at the PSE are subject only to stock transaction tax equivalent to 0.50 percent of the transaction value levied on the seller.