Citing the need to promote the development of the Philippine capital market and encourage the widest participation of ownership in enterprises, the Securities and Exchange Commission (“SEC”) published on 31 May 2017 the proposed Rules and Regulations on Minimum Public Ownership of Publicly Listed Companies (the “Rules”). The Rules increase to twenty percent (20%) the required public float for all companies whose shares are listed and traded in an exchange.

The “public float” is the portion of the issued and outstanding shares that are freely available and tradable in the market, and are not meant for the purpose of gaining substantial influence on how the company is being managed. Shareholdings of ten percent (10%) or more of the total issued and outstanding shares of a company are excluded in its public float.

Based on the Rules, starting 01 July 2017, all companies filing a registration statement pursuant to Sections 8 and 12 of the Securities Regulation Code with the intention to list their shares for trading in an exchange, shall apply for registration with a public float of at least twenty percent (20%) of the companies’ issued and outstanding shares. On the other hand, companies with existing registration statements filed with the SEC and whose shares are listed and traded in an exchange shall have until the end of year 2018 to increase their public float to fifteen percent (15%), and until the end of year 2020 to increase their public float to twenty percent (20%).

A violation of the Rules may be punished by a fine ranging from Ten Thousand Pesos (PhP10,000.00) to not more than One Million Pesos (PhP1,000,000.00), including suspension or revocation of the company’s registration statement.