PSE to relax listing rules for second, SME boards to attract

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(Business World (Philippines) Via Thomson Dialog NewsEdge) The Philippine Stock Exchange (PSE) will relax the listing requirements to entice more companies to raise capital through the stock market, President and chief executive Francis Lim said.



In a briefing with reporters last Tuesday, Mr. Lim said operating history, market capitalization, and track record requirement will be made less rigid for the companies in the second board and the small- and medium- enterprise (SME) board. However, he assured that only qualified companies will be given the go signal to offer their shares to the public.

Under the basic guidelines, a company under the second board must demonstrate its potential for superior growth. It must have an operating history of at least one year prior to its listing. At listing, its market capitalization must be at least P250 million. A company eyeing the SME board will be evaluated based on the integrity and capability of its management and its controlling stockholders; company's prospects for further growth and profitability; viability of the business and sustainability of the projected earning stream and company's lack of existing material conflict of interest.

"If the board approves our initiative in terms of listing rules for the second and SME boards, we will submit this to the Securities and Exchange Commission [SEC]. The [companies listing in the] first board do not have a problem since they have the capability. One thing peculiar is people are used to [the idea of] raising money through the debt market. They are not educated in terms of raising capital through the stock market. That is one alternative I would like to give. They don't have to give up control of the company," he added.

Mr. Lim also said companies would find it easier to list either in the second board or SME board rather than do backdoor listing.

In a recently SEC-approved guideline, backdoor listing is defined as a situation when "a listed company acquires or merges or combines with an unlisted company, or when a listed company is acquired by, merged or combined with an unlisted company, and which acquisition, merger, or combination results in a substantial change in the business, membership of the board of directors or voting structure of the listed company."

The SME index, put up in 1999, is a separate listing board which allows young firms with high-growth potential to raise capital by offering shares to the public. SMEs include those registered with the Board of Investments (BoI) as well as small- and medium-scale manufacturers and exporters. There are three firms under the SME index: online equity matchmaker Cashrounds, Inc., Makati Finance Corp. and information technology firm SQL Wizard, Inc.

Mr. Lim also said he expects a fourth company to list by yearend following soon-to-be listed Alliance Tuna International, Inc.

In the first semester, the market saw the market debut of Lopez-led independent power producer First Gen Corp. and online stockbrokerage firm CitisecOnline.com.

The company, which he declined to identify, will try to take advantage of the uptrend in the stock market and list in the first board to raise $200 million.

BusinessWorld sources said this company has a capitalization of P30 billion.

Last Tuesday, the PSE entered into an agreement with Knowledge Institute to educate more companies on the how's and why's of listing.

Knowledge Institute managing director Rodolfo Reyes said the unit of SyCip Gorres Velayo & Co. (SGV & Co.) has sent out invitations to 200 clients for its lecture series that will start on Oct. 10. Knowledge Institute will first tap the companies under business process outsourcing (BPO) sector.

"We approached the PSE since it is their thrust is to educate the public. In Knowledge Institute, this is our main line of business. We organize seminars. We are focusing on BPOs because they are the hottest item in town. We are going to focus on industries such as semiconductors, franchisees, BoI-registered firms," he added.

Mr. Lim said it is not simple to get companies to be listed.

"They have to prepare themselves. They have to do their own housekeeping. They have to know the rules. We hope we are planting the seeds to help more listings. This is where we can help them prepare themselves. Partnering with professional firm is the right step to take of getting more companies listed," he added.

Copyright 2006 BusinessWorld (Philippines). Source: Financial Times Information Limited - Asia Intelligence Wire.
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