The Philippine Stock Exchange (PSE) has unveiled plans to dramatically lower barriers for companies seeking to list preferred shares, aiming to attract more small and medium enterprises (SMEs) to the capital market.
In a new consultation paper, the exchange proposed slashing the minimum public offering size for preferred shares from P1 billion to just P100 million—a 90% reduction. This move is designed to "democratize access" to public funding and provide a viable alternative to crowdfunding for growing businesses.
"If they are not yet listed, preferred [shares offering] is a safer way to introduce them," said investment banker Eduardo Francisco, president of BDO Capital & Investment Corp., who had previously advocated for lower thresholds. He noted that listing can help smaller firms build credibility with investors.
The PSE also plans to reduce the minimum number of stockholders required upon listing from 1,000 to 100, reflecting the smaller scale of these offerings.
Additionally, the exchange is revising public float requirements. Instead of a fixed 20% minimum, it will adopt a flexible range of 15% to 20%, aligning with recent Securities and Exchange Commission guidelines. In certain cases, based on a company's market capitalization, the float could be as low as 12%.
To further encourage listings, the PSE intends to streamline disclosure rules for companies issuing only preferred shares. The focus will shift to information critical to dividend payments, reducing the number of reportable events from 42 to 29. Requirements such as reports on top shareholders and some corporate changes will be eliminated, while sector-specific certifications for mining and energy firms will be added.
A modified penalty framework is also proposed. While fines for structured disclosure violations remain, penalties for unstructured violations will be simplified to a single tier. Higher penalties will target violations that directly impact preferred shareholders' rights, including dividend declarations and changes to redemption terms.
The PSE is seeking feedback from market participants until May 5, 2026, after which the draft rules may be finalized and implemented.