Philippine Exchange Plans to Relax Listing Rule

Philippine Stock Exchange (PSE) recently proposes to relax listing rules for both main board and SME boards by revising former requirements, with the aim of attracting more companies to go public.

For the main board, current measuring metric EBITDA which needs to reach Php50 million for the 3 fiscal year after application and 10 million for each of the 3 years, is replaced by cumulative net income, which required companies to reach Php75 million for the 3 fiscal year following the filing of the listing application.

And net income of Php50 million should be reached for the fiscal year preceding the filing of the application.

PSE proposes to use net income rather than EBITDA to measure the profitability to confirm companies admitted to listing have the ability to generate profits for the benefit of investors.

The shareholder equity is required to reach a minimum of Php500 million, which aims to measure the financial condition of the applicant. Furthermore, current minimum market capitalization requirement of Php500 million is removed in the proposed revision.

For companies planning to list on SME board, the year restriction of operating history is relaxed. The applicants should have at least 2-year operating history, 1 year shortened compared to 3 years at current stage.

Applicants can get qualification for listing by meeting the requirements of EBITDA or net sales/operating revenues.

EBITDA is required to reach Php15 million for the last 3 years and net sales/operating revenues requires that Php150 million is reached for the last 3 years or such shorter period as the company has been operating, with average net sales or operating revenues growth rate showing a minimum of 20% over the last 2 years.

In addition, current requirement of positive EBITDA generated in at least 2 of the last 3 fiscal years is removed.

“While the rule revisions we are recommending are meant to make it easier for companies to go public, the PSE is keeping and will continue to enforce listing provisions pertaining to investor protection and suitability requirements,” PSE president and CEO Ramon Monzon said.