By Alexandria Grace C. Magno
A LAWMAKER has filed a resolution in the House of Representatives urging the Securities and Exchange Commission (SEC) and the Philippine Stock Exchange (PSE) to review their regulatory framework to allow subsidiaries of listed companies to issue and list preferred shares in the stock market, while ensuring investor protection, transparency, and market integrity.
House Resolution No. 263, introduced by Albay Rep. Raymond Adrian E. Salceda on Sept. 9, is pending with the Committee on Trade and Industry.
The resolution noted that subsidiaries in sectors such as power generation, renewable energy, water utilities, telecommunications, and infrastructure require expanded financing options.
Allowing them to issue preferred shares would provide additional avenues for raising capital beyond traditional bank loans, it said.
China Bank Capital Corp. Managing Director Juan Paolo E. Colet said that in 2022, the PSE established rules allowing companies to conduct initial public offerings and list preferred shares, effectively making this capital-raising option available to subsidiaries of listed firms.
“However, the House Resolution should give the SEC and PSE an opportunity to revisit these rules to make it easier for such subsidiaries to access the market for preferred shares,” he said in a Viber message.
In 2022, the PSE introduced a rule that permits companies to list preferred shares for their initial public offering without listing common shares, which enabled subsidiaries of listed companies to raise capital exclusively through preferred shares. The rule required a minimum public offering size of P1 billion or 20% of the preferred shares’ market capitalization, along with at least 1,000 stockholders at the time of listing.
Mr. Colet highlighted potential reforms worth exploring. “First, lowering or removing the requirement to have at least 1,000 shareholders and a 20% public float, and second, liberalizing the rules on operating history and financial track record,” he said.
The resolution also calls for updated regulatory frameworks that would include safeguards such as consolidated group reporting and transparent disclosures to protect investors and maintain market integrity.
Meanwhile, SM Investments Corp. Economist Robert Dan J. Roces said the measure may open the door for more companies to tap the stock market efficiently.
“It could let subsidiaries raise long-term funding without weighing down the parent, while still under SEC oversight,” he said in a Viber message.
“The [House resolution] broadens investor choice, deepens the capital market, and supports growth sectors like infrastructure and energy,” he added.
For his part, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said: “This is one innovative way to further develop the capital markets with a customized regulatory approach that adapts to market realities and investor requirements, while also easing administrative requirements for subsidiaries of listed firms.”
