The Philippine Stock Exchange issued the draft amended rules on involuntary delisting that give investors an exit mechanism and increase the penalties for erring directors and officers.
A listed company subject to involuntary delisting proceedings under the draft rules will be required to conduct a tender offer to all stockholders.
The tender offer price will be the highest value based on the fairness opinion or valuation report prepared by an independent valuation provider or the volume weighted average price of the listed security for one year immediately preceding the issuance of the delisting order.
If the listed company has been under suspension for at least one year as of the issuance of the delisting order, the tender offer price will be the highest value based on the fairness opinion or valuation report.
The PSE said the current rules lacked sufficient measures to ensure investor protection in case of involuntary delisting of a listed company.
The current rules do not provide an exit mechanism for investors and have inadequate sanctions in case of violations.
In terms of penalties, the PSE wants heavier penalties imposed against erring directors and officers, including compliance office and corporate information officials.
Under the draft rules, directors and executive officers of a company that has been involuntarily delisted may be disqualified from becoming directors, executive officers, compliance officers and corporate information officers of any listed company for a period of five years or more, or perpetually, from the effective date of delisting.
The draft rules also provide that the PSE may initiate delisting if a company is unable or unwilling to comply with the listing requirements of the the exchange, including insolvency, non-operations or suspension of business operations, negative stockholders’ equity, issuance of false or misleading statements or omission of material information in reports, and non-submission of reportorial requirements.
The local bourse may also delist a company in order to maintain a fair, orderly and transparent market and protect investors.
Companies that were involuntarily delisted from the PSE include Calata Corp., Alphaland Corp., Uniwide Holdings Inc., Marsteel Consolidated Inc. and Gotesco Land Inc.
