SEC firm on 20% public float for IPOs, but exemptive relief available

The Securities and Exchange Commission (SEC) on Thursday said that while it remains firm on the 20% minimum public float requirements for companies looking to go public, it has allowed an initial public float of 15% for select firms, through exemptive relief “subject to strict criteria”.

In a statement, the SEC said companies may apply for the relief as long as they bridge any gap from the 20% standard within two years from the listing date, and only as the agency deems necessary. This covers listing applications that have already been filed with and accepted by the regulator.

“The Securities and Exchange Commission remains firm on the 20% minimum public float requirement for companies applying for an initial public offering (IPO), especially given the value of higher public ownership to market depth and efficiency,” it said.

“The SEC is committed to maintaining a fair, transparent, and efficient capital market. While the Commission welcomes new listings, it upholds stringent regulatory standards that safeguard the integrity and long-term stability of the Philippine capital market and the broader economy,” it added.

Under SEC Memorandum Circular 13 Series of 2017, the minimum public ownership on IPOs was raised to 20% from the 10% requirement at the time.

“Beyond enhancing market liquidity, the minimum public ownership requirement plays a crucial role in improving price discovery and reducing opportunities for price manipulation,” it said.

“The float requirement also seeks to reduce ownership concentration and encourage good corporate governance, ultimately strengthening the Philippine capital market,” it added.

In the same statement, the SEC reiterated that it has yet to receive any application for regulatory relief from any potential IPO applicant.

SEC chairperson Emilio Aquino on Wednesday said the agency has yet to receive a request from GCash, one of the most anticipated IPOs of the year seeking at least $8 billion in valuation, to avail of exemptive relief. A Bloomberg report noted that this will partly depend on whether the SEC would agree to a lower minimum public float requirement of 10% to 15%.—AOL, GMA Integrated News