PSE mulls 'Maharlika' trading board for outstanding PHL companies

The Philippine Stock Exchange (PSE) is planning to set up by September this year a "Maharlika Board," a separate trading board for Philippine companies with world-class corporate governance practices. The “Maharlika Board," the first of its kind in Asia, is part of the government's program to promote the Philippines as a prime investment destination. “This board will only include listed companies that achieve the highest standard of corporate governance," Argel Astudillo, PSE’s corporate governance head, said on Tuesday. To be included in the Maharlika Board, companies will have to increase their public floats to as much as 30 percent, Astudillo said. The companies will also be required to have at least seven independent directors, he added. Three of these directors must be independent directors, who will be voted by minority investors. In exchange, companies that qualify will receive discounts on listing and maintenance fees paid to the PSE. Tax perks and other financial incentives may also extended to Maharlika Board members, he said. Astudillo said the Maharlika Board will be loosely patterned after Brazil’s “Novo Mercado," a board for that country’s most transparent listed firms. Foreign studies have shown that investors value companies promoting good corporate governance higher by 20 to 25 percent higher compared to other firms. “We want to rebrand our country to show the world that we are serious about focusing on good corporate governance," Astudillo said. Astudillo said the country's negative image as an investment destination has burdened Philippine financial markets. He cited controversies such as the 1999 stock manipulation case and insider trading involving listed firm BW Resources. Institute of Corporate Directors (ICD) president Rex Drilon said the Philippines has also been criticized for not having enough shares listed on the market to encourage active trading. A 2010 report of CLSA Philippines and the Asian Corporate Governance Association ranked the Philippines at the bottom of a list of 11 countries in Southeast Asia based on good governance practices. Astudillo said the Philippine equity market, the oldest in Southeast Asia, is currently the smallest in the region. “The aim is to make the Philippines a more attractive market, not just for local investors but also for foreigners," Astudillo said. – VVP/OMG, GMA News