Relaxed rules for listing will encourage more companies to tap the stock market to raise funds, according to
Ramon Monzon, Philippine Stock Exchange president.
Speaking at the PSE’s roundtable discussion Tuesday where executives from large companies like Ayala Corp., SM Investments Corp., Puregold Price Club Inc., and Wilcon Depot Inc., shared their initial public offering journey, Monzon said the pandemic relief provision in the amended listing rules, which will be in effect until next year, will help companies which need the financial boost as they gear up for post pandemic business activities.
“With this provision, PSE will give due consideration on the impact of the pandemic when evaluating a company’s financials. We also look forward to more SME listings, especially as we now have a sponsor model in place to provide companies in high growth sectors the opportunity to raise funds even without the required track record,” he added.
In March, the PSE released its amended listing rules approved by the Securities and Exchange Commission (SEC), which contains relaxed profitability and operating history requirements and a temporary relief clause in considering applications for companies due to the pandemic.
In approving listing applications filed this year and next year, the PSE, on a case-to-case basis, may consider the profitability of the applicants for any two fiscal years in the three most recent fiscal years, excluding the year of the pandemic impact.
Under the sponsor model, the applicant’s suitability for listing will be evaluated in the first instance by a listing sponsor accredited by the PSE and if the applicant meets the suitability for listing criteria, after thorough assessment of its financial condition, business viability, future prospects and management track record among others, listing sponsor shall endorse the listing application to the PSE.
The sponsor model has been practised in other stock exchanges and is seen to be beneficial to SMEs and start up companies that have very good profitability and expansion potential but could not tap the stock market for funding because they do not qualify to list based on other set criteria.
SEC chairman Emilio Benito Aquino, in the same event said the Commission is “in continuous discussion with relevant market participants on how shelf registration may further assist businesses in their fundraising activities.”
