The Philippine Stock Exchange along with three business organizations have urged the Securities and Exchange Commission to retain the prevailing threshold on tender offers, citing that a lower trigger point will create ramifications detrimental to the capital markets, a statement from PSE said.

The opinion of the PSE, Investment Houses Association of the Philippines, Financial Executives Institute of the Philippines, and the Bankers Association of the Philippines is stated in a position paper they submitted to the SEC last week.

The groups said in the statement that a lower tender offer trigger point will drive away investors, because it will jack up the cost of stock market transactions, delay the execution of these deals and expose affected investors to unnecessary risks.

A lower threshold will also upset PSE plans to introduce sophisticated market instruments, especially derivatives, thereby constricting the growth of the stock exchange, they added.

The position paper was signed by Francis Lim, PSE president and chief executive officer; Cesar Virata, former prime minister and now BAP president; David Balangue, managing partner of SyCip Gorres Velayo and Co. and president of Finex; and Natividad Alejo of BPI Capital Corp., IHAP president.

They said they are worried over the SEC decision to lower the tender offer threshold, because even if well-meaning, will drive away investors and retard the growth of the capital markets.

By definition, the statement said, a tender offer is a solicitation from a company or a third party to buy shares of a corporation for a fixed period of time usually at a premium or a price higher than what is prevailing in the market.

The rules aim to protect minority owners who may be left out, if the buyer extends the offer only to strategic partners or majority owners of a company, it added.*

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