The Commission on Dec. 3 released for public comment a draft memorandum circular (MC) outlining proposed adjustments to the MPO rule for issuers seeking to list shares on an exchange.
The SEC said the calibrated approach is designed to strike a balance among several policy considerations, including market liquidity, investor protection, capital formation, and the competitiveness of the Philippine stock market.
The draft also reflects global shifts in IPO activity, evolving regional frameworks, and current investor risk appetite.
How the new system will work
Under the proposal, companies seeking to conduct an initial public offering will be grouped into five tiers based on their expected market value at the time of listing.
Tier I companies—valued at P500 million or less—must have a minimum initial public float of 33 percent.Tier II firms—worth more than P500 million up to P1 billion—must float 25 percent, subject to a minimum of P165 million.
For Tier III companies (P1 billion to P50 billion), the minimum initial float is 20 percent, with at least P250 million in public shares.
Tier IV issuers (P50 billion to P150 billion) must float 15 percent, equivalent to a minimum of P10 billion.
Tier V firms—valued above P150 billion—will need to float 12 percent, provided this amounts to no less than P22.5 billion.
Maintaining public ownership
Beyond IPO requirements, companies must also meet post-listing MPO thresholds. Firms under Tiers I to III must maintain 20 percent public ownership, while Tier IV must keep 15 percent and Tier V 12 percent.
If a company’s public float falls below the required minimum, it must restore compliance within 12 months and notify the SEC within 10 days, submitting a time-bound plan to correct the deficiency.
What happens to existing listed firms
Companies already listed prior to the effectivity of the new circular will remain subject to the current 20 percent maintenance requirement under SEC MC No. 13, Series of 2017.
What’s next
The SEC is inviting the public and industry stakeholders to submit comments on the draft rules before finalizing the revised MPO framework, which aims to enhance market depth while supporting issuers at varying stages of growth. —Ed: Corrie S. Narisma
The public may send their feedback on the draft memorandum circular via email at policyfeedback@sec.gov.ph until Dec. 23.
