The Philippine Stock Exchange (PSE) may tighten the guidelines that allow private companies to list on the bourse through a merger with a public corporation, also known as the back door listing rule, citing the need to boost minority shareholders’ protection.

In a chance interview, PSE president and chief executive officer Hans Sicat said the bourse started the review of its backdoor listing rule “two weeks ago” and will likely conclude this in the latter part of this month or in July.

“The issue here is we want to make sure that the original rationale for why [ the backdoor listing rule] is there cannot be abused by various companies. We just want to review the situation and see whether the rules are adequate,” Sicat said on Friday, declining to give details.

The bourse head also declined to say which instances prompted the PSE’s review.

The development comes as listed East Asia Power Resources Corp. became the most recent firm speculated to become a backdoor listing vehicle after privately held Century Properties Inc. announced the acquisition of a 93.58 percent stake in the inactive power barge operator on May 31.

Asked to comment on that deal, Sicat said the PSE is more interested in reviewing the tender offer details for East Asia Power.

To comply with the mandatory tender offer rule, Century Properties has offered to buy the remaining 6.42 percent it does not yet own for P0.04 each.

This is higher than the P0.038 per share it paid to East Asia Power’s majority shareholders, but well below the P0.28 trading price of the company before the deal was announced. The offer period started in June 3 and will end on July 11.

Continued speculation that Century Properties may take its assets public through East Asia Power has allowed the latter’s shares to surge more than three times to P0.86 each last week, before closing down to P0.73 per share on Friday.

Sicat said the PSE is doing a parallel study on the need to better integrate the tender offer rule with its existing guidelines.  At present, imposing the tender offer falls solely under the jurisdiction of the Securities and Exchange Commission.

“When you take a look at the tender offer, it is one of those things that are not integrated with our rules in a well thought out way,” Sicat sad.

Robert Vergara, PSE director and Government Service Insurance System president, said the review of the backdoor listing rule is not likely to result in a major revamp.

“We don’t have to reinvent the wheel.  It’s just a question of what other regimes have done to try and prevent some of the abuse that has taken place where a minority shareholder in a shell company is suddenly diluted massively by a backdoor listing,” Vergara said.

“We want make sure minorities do not get the short end of the stick whenever there is [ this type of ] corporate event,” he added.

The back door listing rule and listing by way of introduction are routes offered by the exchange apart from the traditional initial public offering to encourage more listings at the PSE, considered among the smallest bourses in the region.