SEC considers tiered public float for IPOs

THE Securities and Exchange Commission (SEC) is looking at a tiered approach for the minimum public float requirement of companies seeking to list on the stock exchange, its chairperson said.

- By Revin Mikhael D. Ochave Reporter

SEC Chairperson Francisco Ed. Lim said the current 20% minimum public float requirement for companies planning to conduct an initial public offering (IPO) is a “one-size-fits-all” situation that could be addressed by a tiered system depending on the company’s market capitalization.

“A 20% float at IPO, regardless of the size of the issue, was done to improve the liquidity of the market, which is one of the basic problems. But I think the 20% (float) is ‘one size fits all.’ Personally, I don’t think that’s the way,” Mr. Lim said in an interview to be aired on One News’ Thought Leaders with Cathy Yang on July 25.

Mr. Lim said he asked the supervising SEC commissioner to look at tiers that would depend on the company’s market capitalization.

“The higher the market capitalization is, the lower the percentage of free float,” he said.

Mr. Lim said the SEC will internally discuss the proposal but will also get comments from the Philippine Stock Exchange (PSE) and the public.

“I think this has been done by other exchanges. Let’s see what happens,” he said.

Mr. Lim said he is not in favor of providing exemptive relief from the current 20% public float requirement.

“I’m quite allergic to exemptive relief,” he added.