A company that is interested in becoming a listed company by applying for listing by way of an initial public offering is now required to sell to the public between 20% to 33% of total shares depending on market capitalization. For companies with a market capitalization of more than P1 billion, the minimum public ownership must be 20% of total shares or P250 million worth of shares, whichever is higher. For companies with a market capitalization of between P500 million to P1 billion, the minimum public ownership must be 25% of total shares or P100 million worth of shares, whichever is higher. For companies with a market capitalization of less than P500 million, the minimum public ownership must be 33% of total shares or P50 million worth of shares, whichever is higher. For companies applying for listing by way of introduction and listing by way of backdoor, the minimum public ownership must be 20%. It is worth mentioning that upon and after listing a listed company must maintain a minimum public ownership of at least 20%. The rationale for adjusting the minimum public ownership of listed companies would include but is not limited to increasing market liquidity, decreasing market volatility, restraining market speculation and preventing market manipulation. Although the collaboration of the regulatory organizations such as the Securities Exchange Commission and the Philippine Stock Exchange is commendable for implementing a higher minimum public ownership of listed companies, it does beg the question of why not apply these rules to all listed companies. Based on the guidelines on minimum public ownership of listed companies issued by the regulatory organizations, these requirements are mandated to companies applying for listing by way of an initial public offering, listing by way of introduction and listing by way of backdoor but not to the other companies that have been listed before the issuance of the guidelines. If the regulatory organizations want to institutionalize the best possible corporate governance among their stakeholders then they must ensure that the guidelines are applied to all listed companies without prejudice to the timing of listing. Failure to do so would encourage some listed companies that have been listed before the issuance of the guidelines to remain as shell companies without active business operations or significant assets. Shell companies are not unlawful but they sometimes bend the rules without breaking them by disguising business ownership from the regulatory organizations and evading automatic delisting from the local bourse.
