Securities regulator introduces new tiered IPO public float regulations

The Securities and Exchange Commission in the Philippines recently announced new tiered public float requirements for initial public offerings, aiming to provide companies with more flexibility and better adaptability to market conditions.

According to a circular issued on Tuesday, companies with a valuation of up to 500 million pesos must offer at least 33% of their shares to the public. This requirement decreases to 25% for firms valued up to 1 billion pesos, 20% for companies up to 50 billion pesos, and 15% for larger issuers. Exceptionally large companies worth at least 200 billion pesos may be allowed to list with a public float as low as 12%.

After the IPO listing, companies are required to maintain a minimum of 20% or 15% public ownership, depending on their size. If a company falls short of this requirement, they must bring their public ownership back in line within six months. Additionally, issuers are mandated to submit a bookbuilding report within 10 days of completing the offering.

The circular, dated February 24, has been implemented immediately. It is worth noting that the previous rule in the country stipulated that all companies looking to go public must have a minimum free float of 20%.

The new regulations introduced by the Securities and Exchange Commission seek to streamline the IPO process and provide companies with more nuanced guidelines to facilitate their entry into the public market. By tailoring the public float requirements to the size of the company, the Commission aims to create a more conducive environment for companies of varying scales to access capital markets.

These changes are expected to have a positive impact on the IPO landscape in the Philippines, offering companies more options and flexibility when considering going public. By adjusting the public float requirements based on company size, the Securities and Exchange Commission is aligning the regulations with market dynamics, thereby fostering a more investor-friendly environment and promoting capital market development in the country.