The Philippine Stock Exchange plans to revamp its listing rules to encourage more initial public offerings, as the country lags behind other exchanges in the region in terms of new listings.
The PSE said in a draft amendments to the listing rules for the main board and small, medium and emerging boards that it aimed to update the listing rules to take into account the challenges brought about by the COVID-19 pandemic, while positioning the equities market as a viable capital raising option for companies looking to fund recovery measures or pursue expansionary plans.
The PSE plans to remove the P500-million minimum capitalization requirement for companies seeking to list in the main board.
Instead of focusing on EBITDA (earnings before interest, taxes, depreciation and amortization) as a measure of profitability, the PSE will look into the net income of companies planning to hold an IPO.
Companies will be required to have a cumulative net income P75 million for three fiscal years immediately preceding the filing of the listing application, and a net income of P50 million for the fiscal year before the filing of the application.
The PSE will impose a minimum total stockholders’ equity requirement of P500 million as a measure of the financial condition of the applicant.
For companies planning to list under the SME board, the PSE will remove the requirement oh having a positive EBITDA in at least two of the three fiscal years preceding the filing of the application.
It will instead require companies to meet the cumulative net sales or operating revenues of at least P150 million for the last three years with at least 20 percent average net sales or operating revenues growth rate over the last two years.
It will also shorten the operating history requirement from three years to two years prior to the filing of the listing application and replace the P100-million minimum authorized capital stock requirement with P25 million paid-up capital requirement.
Meanwhile, the PSE said it would give a temporary relief to companies applying for IPO in 2021 or 2022, whether in the main or SME board, in consideration for the business impact of COVID- 19.
For IPOs that will be filed in 2021 and 2022, the PSE on a case-to-case basis may consider the profitability of the applicant for any two fiscal years in the three most recent fiscal years, excluding the year of the impact.
It said that in 2019, there were only four new listings at the PSE while Indonesia Stock Exchange had 55 new listings. Other exchanges had 10 to 34 new listings.
The PSE said that as of August 2020, it was able to add three new listings. Indonesia Stock Exchange was able to list five companies in its main board and 32 more companies in its SME board while Bursa Malaysia had 13 new listings during the same period.