The Securities and Exchange Commission (SEC) plans to reduce the minimum initial public ownership (public float) requirement for larger companies seeking to go public to 12 percent, based on a tiered approach outlined in draft guidelines issued Friday.
The proposed tiered system, part of the SEC’s review of capital-market listing policies, would adjust the minimum public float requirement based on the issuer’s size.
The SEC noted that the new rules were drafted, taking into account global and regional shifts in initial public offering (IPO) activity, evolving frameworks in peer markets, market absorptive capacity and prevailing investor risk appetite.
The rules will apply to companies seeking to hold an IPO. Under the proposal, companies would be classified into five tiers based on their expected market value at the time of their IPO:
Tier I companies, valued at P500 million or less, should have a minimum initial public float of 33 percent.
Tier II issuers, with market values above P500 million up to P1 billion, should meet a 25-percent minimum, subject to at least P165 million in public float.
Tier III companies, valued above P1 billion up to P50 billion, should float 20 percent, subject to a minimum of P250 million.
Tier IV companies, valued above P50 billion up to P150 billion, should have a 15-percent float, with at least P10 billion in public ownership.
Tier V companies, with an expected market value greater than P150 billion, should meet a minimum initial public float of 12 percent, provided the float is not less than P22.5 billion.
The reduced requirement for large firms could benefit companies like e-wallet giant GCash, which has pushed its planned IPO to next year. GCash’s valuation is at $5 billion following recent investments from Ayala Corporation and Japan’s MUFG Bank.
Companies will also be required to maintain minimum public ownership levels after listing: 20 percent for Tiers I through III, 15 percent for Tier IV, and 12 percent for Tier V.
If a company’s public float falls below the minimum post-listing, it should restore compliance within 12 months and promptly notify the SEC. It should also submit a time-bound business plan within 10 days of becoming aware of the deficiency.
Companies that went public before the new rules take effect would remain subject to the existing 20-percent public float requirement.
 proposes new tiered rules to reduce the minimum IPO public float to 12 percent for the largest companies, a move that could benefit firms like e-wallet giant GCash.){kind=link}