The Philippine Stock Exchange (PSE) has issued Memorandum Circular 2020-0076¹ on August 3, 2020 and this sets out the Guidelines on Minimum Public Ownership Requirement for Initial and Backdoor Listings (2020 MPO Guidelines). The Guidelines provide a modified minimum public offer size requirement for initial listings depending on the company’s market capitalization and require a company applying for listing by way of introduction and backdoor listing to have at least 20% public float upon and after listing. 

The recently issued Guidelines aim to: (i) increase the public ownership level of Philippine listed companies, (ii) promote the development of the capital market, and (iii) encourage the widest participation of ownership in listed enterprises.

This briefing discusses relevant issuances of the Securities and Exchange Commission (SEC) and of the PSE relating to the minimum public ownership (MPO) rule.

A. Determination of Public Float

The categorization of shareholdings in a publicly listed company (PLC) depends on (i) the amount of shareholding and its significance to the total outstanding shares, (ii) purpose of investment, and (iii) extent of involvement in the management of the company.²

Under SEC Memorandum Circular 13-2017 (SEC MC 13-2017),³ public float “refers to the portion of the issued and outstanding shares that are freely available and tradable in the market and are non-strategic in nature or those not meant for the purpose of gaining substantial influence on how the company is being managed.” This excludes significant shareholdings of 10% or more of the total issued and outstanding shares of the company. This is in line with the Guidelines in Determining the Public Ownership of PLCs in PSE Memorandum Circular 2010- 0505⁴ , as amended by PSE Memorandum Nos. 2012-0003⁵ and 2012-0053⁶ (PSE MPO Rules), which consider significant shareholdings (i.e., 10% or more of the total issued and outstanding shares) held for the purpose of gaining substantial influence on how the PLC is being managed as non-public.

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¹ Memorandum Circular 2020-0076 dated August 3, 2020; available at
https://www.pse.com.ph/stockMarket/circulars.html; last accessed at 4:43PM on August 28, 2020.

² See PSE Memorandum C.N. No. 2010-0505.

³ Rules and Regulations on Minimum Public Ownership (MPO) on Initial Public Offerings dated November 29, 2018; https://www.sec.gov.ph/mc-2017/mc-no-13-s-2017-rules-and-regulations-on-minimum-public-ownership-mpo-oninitial-public-offerings/; last accessed at 4:54PM on August 29, 2020.

⁴ Guidelines in Determining the Public Ownership of PLCs dated October 28, 2010; available at https://www.pse.com.ph/stockMarket/circulars.html; last accessed at 4:58PM on August 28, 2020.

⁵ Amended Rule on Minimum Public Ownership dated January 3, 2012; available at https://www.pse.com.ph/stockMarket/circulars.html; last accessed at 5:01PM on August 28, 2020.

⁶ Amendments to the Reporting Requirements under the Rule on Minimum Public Ownership dated September 28, 2012; available at https://www.pse.com.ph/stockMarket/circulars.html; last accessed at 5:03PM on August 28, 2020.