The Philippine Stock Exchange (PSE) said it will suspend trading of shares of non-compliant listed companies starting January 1, 2013 if they fail to meet the minimum public ownership (MPO) requirement.
San Miguel Brewery and PAL, owner of Philippine Airlines Inc are among several large Philippine companies that may be delisted and lose their presence on the stock exchange because of the 10% rule.
In a memorandum, the PSE said listed companies that are non-compliant with the MPO requirement have been given a grace period of up to December 31, 2012 to comply.
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The PSE requires publicly-listed firms to have a minimum of ten (10) percent of their issued and outstanding shares, exclusive of any treasury shares, held by the public. The MPO rule is in line with the Capital Market Development Plan Action which aims to provide a fair and efficient facility for price discovery and to ensure that sufficient liquidity exists in the stock market.
"The MPO requirement is one of the governance initiatives that we believe will help democratize the ownership of listed companies and increase trading activity. As the deadline for compliance with the rule is nearing, we urge investors to continue to update themselves of developments concerning listed companies that remain to be non-compliant up to this date," PSE President and Chief Executive Officer Hans B. Sicat said.
The PSE has been regularly posting on its website the list of the non-MPO compliant companies. Its most recent announcement, dated December 7, 2012, lists down 25 listed companies that remain non-compliant with the MPO rule.
Immediately after December 31, 2012, the Exchange shall impose a trading suspension on the shares of non-compliant listed companies for a period of not more than six months or until June 30, 2013. If after June 30, 2013, a listed company remains non-compliant, the listed company's shares shall be automatically delisted.
The Bureau of Internal Revenue, as contained in its recent rule issuance relating to the MPO rules, will impose capital gains tax and a documentary stamp tax (DST) on every sale, barter, exchange or other disposition after December 31,2012 of shares of listed companies which are not compliant with the MPO requirement.
After December 31,2012, a capital gains tax equivalent to five (5) percent of the net capital gains amounting to not over P100,000 shall apply while a 10 percent capital gains tax will apply on the excess. Also, DST of seventy five centavos (P0.75) on each two hundred pesos (P200.00) of the par value of the stock will also be applied on the sale.
In contrast, trading of shares listed and traded at the PSE are subject only to stock transaction tax equivalent to 0.50 percent of the transaction value levied on the seller.
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