After the range of complaints made by minority shareholders unsatisfied with the tender offer price provided by companies that have removed themselves from the bourse, the Philippine Stock Exchange finally takes action. A draft circular on the planned delisting rules has been issued by the governing body.
According to the Exchange, it has reviewed the voluntary delisting rules after the flurry of complaints made by minority stockholders from the market. The complainants claimed that they only feel compelled to accept a company’s decision to delist and essentially had no choice but to accept the company’s offer price for fear that they will be left with shares that would no longer have a secondary market. The PSE deemed these complaints worthy of action and now made its delisting rules more at par with other stock exchanges.
As such, the PSE announced that it would now require companies planning to delist to get first the approval of at least 75 percent of total outstanding and listed shares of the company before it can pursue the desired action. Consent or approval might b given in a duly convened meeting or through written form. At present, the approval of incumbent directors can already lead to delisting.
The PSE added that the number of votes rejecting the delisting proposal should not be over 10 percent of the overall outstanding as well as listing shares.
Concerning prices, the PSE also has certain proposed regulations. The PSE proposes to set a floor price so that the tender offer price cannot be set lower than the highest value, estimated through the valuation of an independent body. This body would present what the highest price is going to be the fairest, and the price to be set by the company should not be lower than this.
Apart from the opinion of the independent body, the offer price should also be the highest closing price in the last six months before the notice to stockholders about the proposed delisting date has been made. It must also be the highest volume-weighted average price for a year immediately before the date of the notice.
This announcement comes at the heels of a letter from SharePhil sent to PSE President Ramon Monzon last month. According to SharePhil, it is recommended that delisting should have the approval of the supermajority of shareholders.
SharePhil claims this is the best practice, given that this is the rule in the majority of ASEAN exchanges, such as Bursa Malaysia, Indonesia Stock Exchange, Singapore Exchange, and even the Stock Exchange of Thailand. From these exchanges, it can be seen that they require a supermajority approval, which means between 67 to 75% of stockholders’ approval.
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