By James A. Loyola
The Philippine Stock Exchange(PSE) is amending its rules on the listing of Real Estate Investment Trusts (REITs) to specifically bar these firms from investing in assets overseas.
The PSE said that, the proposed amendments is in line with the government’s policy of reinvestment in the country of proceeds from the offerings of REIT securities.
Under the proposed amendments, “a REIT shall not invest in real estate located outside the Philippines without special authority from the Securities and Exchange Commission.”
To ensure this is followed, a REIT which sells shares to the public must disclose annually the use of the proceeds received by its sponsor or promoters (real estate firm that sold the shares to the public).
Aside from the being barred from investing proceeds overseas, the PSE listing rules will also require the REIT sponsors to reinvest the proceeds in the Philippines within five years.
However, the PSE may grant a longer period of reinvestment if justified by the nature and magnitude of the project involved or in case of force majeure or any unforeseen events.
In addition, the PSE is amending its REIT listing rules to provide for the imposition of a trading suspension of not more than six months if the REIT fails to comply with the minimum public ownership requirement.
If the REIT fails to correct this and still does not meet the minimum public ownership requirement within the six-month suspension, it will be automatically delisted by the PSE.
The amendment removes a 30-day grace period before the imposition of a trading suspension as well as deleting the portion that imposes the delisting only 30 days after the receipt by the REIT of a notice of delisting.
A REIT that has been involuntarily delisted cannot apply for relisting within five years and its directors or officers are also barred from serving in any firm applying for listing within that period.
Prior to delisting, voluntarily or involuntarily, a REIT or its controlling shareholders must conduct a tender offer at a price deemed to be fair by a PSE-accredited valuation provider.
If the tender offer price is lower than or otherwise materially different from the market price of the REIT’s securities based on its volume-weighted average price for 30 trading days prior to the announcement of the tender offer, the REIT shall comment on the difference and the factors underlying it.
Failure or refusal to conduct a tender offer shall be a ground for denial of the petition for voluntary delisting, or imposition of a perpetual relisting prohibition, in case of involuntary delisting.