SEC doubles minimum public float requirement to 20%
The Securities and Exchange Commission will require publicly-listed companies and those intending to have a minimum public ownership of at least 20 percent as part of efforts to deepen the capital market and diversify investor base.
The increased minimum public float requirement will take effect beginning next month.
“SEC has approved the rules for the minimum public offering for IPOs so the requirement (is) if there is an IPO coming forward, the minimum public float must be 20 percent,” SEC commissioner Ephyro Luis Amatong told reporters Tuesday.
Public float of a company refers to the portion of the issued and outstanding shares that are freely available and tradable in the market. These are non-strategic in nature or those not meant for the purpose of gaining substantial influence on how the company is being managed.
Graciano Felizmenio Jr., head of the SEC’s Markets Regulation Department, said investors, especially the institutional fund managers, welcomed the move to increase the minimum public float requirement.
“We expect more liquidity with the increased public float. And more liquidity means that we are more attractive to investors, especially the institutional ones,” Felizmenio said.
According to the SEC, a higher public ownership will reduce volatility and improve market efficiency, the SEC said.
Failure to comply with the minimum public float requirement will result in the imposition of administrative sanctions.