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Tuesday, August 15, 2006

Going public 102

Getting listed in the Philippine Stock Exchange is like going through the eye of the needle. Here's how companies are picked and declared worthy of being traded in the bourse.

By Riva Khristine Maala

We discussed the benefits a business can derive from being listed in the Philippine Stock Exchange and the steps on how to go about it. Now we shall find out how the country's bourse picks companies that it would allow to trade and sell their shares to the public. The PSE has three criteria in deciding whether or not to accept a company's listing application:

1. Capitalization. Is the company's finances stable, and does it have good prospects for continuing growth? Has any action or claim against any of the company's properties been filed? Is the property substantial? Has the company applied for or consented to the appointment of any receiver, trustee, or similar officer for any of its property?

2. Integrity and capability of the company and its officers. Has the integrity or capability of the company or any of its directors, executive officers, promoters, or control persons been questioned? Has the company or any of its officers and directors been sued for suspension of payments or other debt relief in the last five years? Have they been unable to pay maturing debts? Have they declared a moratorium on indebtedness? Has a petition for insolvency been filed by or against the company or any of its directors during the last five years? What about any business of which any of its directors was a director, general partner, or executive officer? Has any of them been convicted in a criminal proceeding for an offense involving moral turpitude? Were the documents submitted with its listing application complete? Is any of the material representation or warranty submitted with the application correct or truthful at the time it was made?

3. Legal issues. Has the company engaged in operations contrary to the public interest, public morals, good customs, laws, rules and regulations, public order, or public policy? Has the company complied with published rules and requirements?

Step-by-step process

The PSE's Listings Department takes about 20 to 30 working days from submission of all documentary and other requirements to process an application for listing. The same department makes the appropriate recommendation to the Listing Committee, which in turn recommends approval of the applications to the Board of Directors. The Board may uphold, modify, or overrule the Listing Committee's recommendation.

Here are the steps for listing:

1. File an application for initial listing.

2. Agree to comply with and be bound by all of the Exchange's listing rules, requirements, and policies. These may include submission of the documentary requirements about the securities and full disclosure of any and all material information related to their issuance.

3. Maintain a minimum of seven directors, who, together with the company officers, are required to accept responsibility for information that all documents submitted to the Exchange contain.

4. Issue an Offering Prospectus with a statement declaring that the applicant company, through its directors, officers, and lead underwriters, exercised due diligence in ascertaining that all material representations contained in the prospectus or offering memorandum, their amendments, and supplements, are true and correct. The same statement shall assert that no material information in the documents was omitted or was misleading.

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