delisting of company

8/10/2019 Delisting of Company

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One of the questions asked by a participant was, what happens to our shares when a

company were buying becomes delisted from the PSEi?

And then this morning, I read another similar question asked by a forum member to

COL Financial advisor, Mike Vias who was worried as to what will happen to her

shares in a company that has been delisted by the PSE. She was not aware that the

delisting happened until now.

What Happens To the Investors Shares of a Delisted Company?

Normally, the stockbroker will advise its clients ahead of time that a particular non-

compliant company is to be delisted either voluntarilyor involuntarilyfrom the PSEi. A

shareholder will have to visit the stock transfer office of the company where shares of

that are delisted. They are the ones that will direct you on how to go reclaiming yourinvestment. Check with your stockbroker when this happens. (Thanks Bro. Mike Vinas

for this information.)

An investor technically still owns the shares of a delisted/suspended company. One can

choose to hold the position for a long while or until the delisted company complies with

the Philippine Stock Exchangesrequirements.

The 10 percent minimum public ownership (MPO) rules of the PSE provide that a

publicly-listed company whose shares are now under trading suspension for non-

compliance with the MPO requirement as of December 31, 2012 have until June 30,

2013 to comply with the 10 percent requirement. The company will be automatically

delisted from the PSE if it does not comply by that date.

A company may also buy back shares from the public as part of a reorganization or in

order to issue them to their employees in accordance to some employee stock award

plan.

If worse comes to worst, e.g. the delisted company decides to close down, the investor

may still be able to get a proportionate share when they liquidate their assets. You mayconsult with the SEC through the Investor Protection and Surveillance department or

through the PSE to clarify the procedures in case the company you are invested in are

closing down.


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But if an investor wants to sell the shares now, he/she may try to consult with the

stockbroker to help in finding an off-the-market buyer of the stocks as these can not be

traded in the market anymore.

An important note: Once you are warned by your stockbroker about a company being

suspended for failing to comply with the PSEs MPO requirement, it is advisable that

you sell your shares immediately.

This will be subject to applicable taxes such as capital gains, documentary stamp (DST),

and donors taxes.

Revenue Regulations 16-2012 Tax Treatment of Sales, Barters, Exchanges or Other Dispositions of Shares of

Stock of Publicly-listed Companies Whose Public Ownership Levels Fall Below the Mandatory Minimum Public

Ownership (MPO) Level, Monitoring of these Companies and their Stock Transactions, and Amending Revenue

Regulations No. 06-08 for the Purpose

How Do We Know If A Company is Experiencing Financial Troubles?
http://www.flickr.com/photos/91264837@N03/8646504302/


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Minority shareholders in publicly-listed companies may now know whether their chosen

companies are experiencing financial troubles through the proposed Rules on

Companies Under Financial Distress by the Philippine Stock Exchange (PSE).

It requires that all companies under financial distress shall disclose their condition at

the PSE. With this proposal, shareholders can have enough time to sell their position in

these companies before they close down.

Companies that are asked to disclose their financial troubles are those that:

Disposed its major business

Suspended their operation for at least six months for any reason

Negative stockholders equity for three consecutive years

Experience any delay in the payment around 10% of their loans

Received adverse opinions on their financial statements for three consecutive years

You may view the rest of the slides below for the complete details on how this proposal

will protect the minority shareholders in case the companies they are invested in are

experiencing financial troubles.

Philippine Stock Exchange Proposed Rules for Companies under Financial Distress
http://www.scribd.com/doc/132595253http://www.scribd.com/doc/132595253http://www.scribd.com/doc/132595253

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