The proposal allows sponsors to sell their stakes after the IPO.
THE PSE proposes to exclude securities in real estate investment trusts (REITs) issued and transferred to their sponsor company from the current lockup clause. /
Within Section 2(a) of Article III of Parts D and E of the PSE’s listing and disclosure rules, REITs are subject to the same guidelines.
According to the law, securities purchased and paid for in full at a price lower than the bid or listing price 180 days before the sale deadline or listing date would be subject to a lockup period of at least 365 days from the date of full payment.
It forbids sponsors from selling their securities in a secondary offering via the initial public offering (IPO), preventing a REIT from meeting the one-third MPO threshold.
A sponsor and a REIT typically enter into a tax-free transaction in which the sponsor acquires a majority interest in the REIT through its issued and unpaid stock in return for income-generating real assets.
Sponsors can be given securities 180 days before the IPO in certain cases, where they may even sell their shares in a secondary sale.
Because of legislative conditions, the PSE is now seeking to exclude shares granted to sponsors as long as they were not issued sooner than 180 days before the IPO.
The reforms would also encourage sponsors to sell exempted securities during the IPO “to the degree necessary to enable the REIT to meet the [MPO] requirement.”
“REIT securities that are protected by this exception but are not traded within the IPO will waive their lockup exemption and will be entitled to the 365-day lockup counted from maximum payment,” according to the PSE.
The applicant business must file all relevant documentation and adhere to the conditions specified in the exchange’s unified listing and disclosure guidelines.
The lockup laws would take the place of the listing application document guidelines in Section 5 of the REIT listing rules. It also defines lockup guidelines for owners in companies planning to list REITs on the local bourse’s slim, medium, and developing boards.
The draft regulations can be found on the PSE’s website.
Interested parties are encouraged to request suggestions or questions about the plan by May 10.