The Philippines: San Miguel Brewery fails to get authorization to extend grace period to comply with MPO rules

Philippine securities regulators have begun to move against firms that fall short of the 10% minimum public ownership (MPO) rule.

Beer maker San Miguel Brewery Inc. said on December 17, the Securities and Exchange Commission (SEC) "denied all requests for extension of the grace period to comply with the MPO rule of the Philippine Stock Exchange (PSE)."

This means trading in the company will be suspended starting next year if it fails to comply with the rule by December 31.

The suspension will run from January 1 to June 30, 2013.

If after the 6-month period San Miguel Brewery remains non-compliant, its shares will finally be delisted from the PSE.

Aside from possible delisting, transactions involving San Miguel Brewery shares are at risk of being slapped with capital gains and documentary stamp taxes beginning next year.

The capital gains tax is 5% for transactions amounting to P100,000 and below, and 10% for transactions exceeding the amount. The documentary stamp tax is P0.75 for each P200 of the par value of the stock.

At present, share sales in the stock market are exempted from these taxes, and are levied only a stock transaction tax of ½ of 1% of the gross selling price of the shares pursuant to Section 127(A) of the National Internal Revenue Code.

The PSE earlier issued a memorandum, giving non-compliant firms until end-2012 to meet the MPO rule, which aims to ensure that sufficient liquidity exists in the market.