The Philippine Stock Exchange said Thursday its board of directors approved a share buyback program and the creation of preferred shares in a bid to reduce brokers’ ownership in the local bourse to 20 percent.
The PSE said in a disclosure the board authorized the repurchase of up to P532 million worth of shares owned by broker shareholders of the exchange.
The buyback will be implemented until Sept. 30, 2019, unless extended by the board of directors.
The PSE said it would repurchase the shares using cash. It will book the repurchased shares as treasury stocks.
“The buyback program shall be implemented in an orderly manner and should not adversely affect the company’s and its subsidiaries’ prospective and existing projects.
The PSE also approved the creation of 3.5 million preferred shares to be issued only to brokers.
The preferred shares are non-voting, cumulative in payment of dividends, non-convertible and redeemable at the option of the board on the third anniversary date.
“The non-voting preferred shares shall only be issued to brokers. The terms and conditions of the issuance of non-voting preferred shares to brokers, including the dividend rate thereof, shall be fixed by the board of directors,” said the exchange.
The PSE said the share buyback and creation of preferred shares were the latest moves to reduce brokers’ ownership in the local bourse to 20 percent as provided under the Securities Regulation Code.
The code states that “no person may beneficially own or control, directly or indirectly, more than five percent of the voting rights of the Exchange and no industry or business group may beneficially own or control, directly or indirectly, more than 20 percent of the voting rights of the Exchange.”
The Securities and Exchange Commission has been urging the PSE to trim brokers’ shareholdings in the exchange to 20 percent for several years now.
The exchange, however, failed to accomplish the task because of the unwillingness of brokers to divest their stake in the PSE.
Brokers ownership in the exchange as of end February this year stood at 26.44 percent.
The PSE earlier implemented measures to dilute brokers’ ownership in the exchange, such as conducting stock rights’ offering and revoking the trading rights of inactive brokerage firms.