Col Financial (Phl)

Reference: https://www.colfinancial.com/ape/Final2/home/new_to_investing.asp

What are stocks?

Stocks are shares of ownership in a corporation. The stock market is a place where stocks are
bought and sold. The Philippine Stock Exchange (PSE) is the corporation that governs our
local stock market. People buy or invest in stocks to benefit from a company's tremendous
value potential over time. Once you buy or invest into a stock you now become part owner or a
shareholder of that particular corporation.

How to make money in stocks?

As a Shareholder, you can now participate in the company's growth and success through stock
Price Appreciation and by earnings Dividends. Capital or price appreciation is an increase in the
market price of your stock over time brought about by an increase in its potential value and the
demand to buy its shares. The faster a company can grow, the faster its price can appreciate.
Profitable corporations can also issue dividends, whether in cash or in additional shares of
stock as a means for shareholders to share in their distributed profits.

Why Invest in the Stock Market?

History has proven that investing in
quality stocks can provide greater
returns than most investment
instruments. This offers you the best
chance in achieving your financial
goals and gives you the ability to
later enjoy the benefits of your
money working for you. The track
record of the stock market also
shows that a good basket of stocks
climb more often than decline reducing risk over the long-term.

Another reason why stocks can outperform other asset classes is because it can compound the
value of your investment. Companies can reinvest the profits they make to generate even more
profit. Moreover any dividends you receive can also be used to buy more shares and thereby
enlarging your overall value as well.

The 4 Golden Rules

Discipline and the right methodology is the key to a successful stock investment program. Understand and adopt
these four essential rules of thumb to keep you on track.
1.
2.
3.
4.

Invest EARLY
Invest REGULARLY
Invest LONG TERM
Invest using DIVERSIFICATION

Invest EARLY
Invest early to take advantage of compounding over a greater period of time.
If I invest Php 25,000 at the age of 25 and I manage to have my investment grow by 8% a year, 40 years later my
investment will be worth Php 543,000.
Investing for your Retirement

Invest P10k at the age of

25

35

45

55

Investing for how many years*

40

30

20

10

Total value of investment at 65

P543k

P215k

P116k

P53k

* Assuming an annual rate of return of 8% per annum (the PSEi has averaged about 10%+)

Invest REGULARLY
Now instead of investing just once, every year I regularly add the same amount into my investment. Look at the
significant difference this can affect my portfolio:
If I invested Php 25,000 at the age of 25, allowing this to also grow by 8% a year, plus adding another Php 25,000
every year thereafter until I retire, I will eventually retire with an estimated Php 7 Million. Compounding and
regularly adding to your investment is the key.
Investing for your Retirement

Invest P1 at the age of

25

35

45

55

Investing for how many years*

40

30

20

10

Total value of investment at 65

P7.0m

P3.0m

P1.2m

P391k

* Assuming an annual rate of return of 8% per annum (the PSEi has averaged about 10%+)

Invest LONG TERM

Long term investing solves the problem of short-term volatility (choppiness in price). On occasion some issues may
come up that may cause prices to swing up and down whether economic, political or natural events. But you can
see from the chart below that the PSE index always bounces back to new highs even through problematic times.

After all companies need time to grow so prepare to sow your seeds in great businesses and let time do the rest.

Invest using DIVERSIFICATION

The management of risk should always come hand-in-hand with your choice of investment. One way of containing
risk is through diversifying or by spreading investments around and away from one single asset class.
As the saying goes, "Do not put all your eggs in one basket."
Moreover try to allocate your capital evenly to a number of stocks in different industries or sectors so as not to put
too much risk in one area; have a good balance in your investments.

Contact Us

Customer Service
(+632) 6 515 888
helpdesk@colfinancial.com
COL Business Center
2403B East Tower, Philippine Stock Exchange Center, Exchange Rd. Ortigas Center, Pasig City 1605 Philippines
COL Investor Center
Ground Floor, Citibank Tower,
Valero corner, Villar Streets,
Makati City 1227
Philippines
(+632) 478 2954
(+632) 478 3316
(+632) 478 3275
Office Hours
M-F, 8:30 am to 5:30 pm

1.

Choose a stockbroker. The PSE has a complete list of information about all its trading participants who are authorized
and qualified to trade securities for you. This list is also available on the PSE's website and the telephone directory's
Government and Business listings yellow pages under the category of stock and bond brokers. Aside from representing you
in the stock market, a stockbroker can also offer you services such as access to market reports/studies, on-time delivery of
important documents, and advise on your investments. It is then important that you trust your stockbroker and that you are
satisfied with its services.

2.

You shall be required to open an account and fill out a Customer Account Information Form and to submit identification
papers for verification. The stockbroker will then assign a trader or agent to assist you in either buying or selling any listed
security. There are also stockbrokers who have an online trading facility that allows you to post orders by yourself, but
sufficient understanding of how the stock market works is key. If you choose to be assisted by a trader or agent, you can
discuss with him/her what stocks you want to buy or sell.

3.

Give the order to your trader, and then ask for the confirmation receipt. Your buy or sell orders are relayed to the
stockbroker's dealer for execution. In an automated system as in PSE, the order is keyed in through a trading terminal and
automatically matched. Confirmation of done trades - via phone, email or online - is made as soon as possible and
subsequently, an official confirmation or invoice should be delivered to you.

4.

Pay before settlement date. The delivery or payment should be made before the settlement date of T+3. For traditional
stockbrokers, settlement of transactions is usually done after three (3) working days from the transaction date. This means
that for transactions done on Monday, as an illustration, payment should be received by Thursday. Meanwhile for online
stockbrokers, settlement of all transactions is done on the transaction date. Settlement of accounts is performed by the
clearing house.

5.

You shall receive from your broker either the proceeds of sale of your stocks (after 3 business days) or proofs of
ownership of stocks you bought (confirmation receipt and invoice). If you wish to have a physical certificate of the stocks
you

bought,

you

can

give

instructions

to

your

broker

and

pay

the

required

upliftment

fee.

You can purchase shares of stocks either through an initial public offering (IPO) or through the open market (also referred to
as the secondary market). Shares sold through IPOs are offered for the first time to the public by the company (primary
market) whereby proceeds of the sale go directly to the company. Shares of listed or publicly traded companies are only
bought during trading hours. These shares have since been transferred from one owner to another and proceeds of the
sales do not go directly to the company but to the owners of the shares.

The Trading Cycle

All equity transactions, whether buying or selling, have a settlement period of T+3 (trading day + 3
working days). This means that a seller should be able to deliver the stock certificate, if any, to his
broker and the buyer must have paid the cost of transaction to his broker within 3 working days after
the trade was done. Historically, settlement was done manually (27-day cycle). With scripless
trading, wherein settlement is done via the book-entry-system (thru Philippine Central Depository or
PCD), transactions are settled on the third day after trade date. Under this system, the investor has
the option to hold on to his certificate (uplift) or deposit (lodge) this certificate in PCD through his
broker-participant
account.

PSE Trading Hours/ Market Phases

8:45 am

National Anthem

9:00 am

Pre-Open Auction Period

9:15 am

Pre-Open No-Cancel Period

9:30 am

Opening Period - Continuous Trading

12:00 nn

Market Recess

1:30 pm

Continuous Trading

3:15 pm

Pre-Close Auction Period

3:18 pm

Pre-Close No-Cancel Period

3:20 pm

Closing Period - Run-off/Trading-at-Last

3:30 pm

Market Close

Board

Lot

System

Equity trading is done by board lot or round lot system. The Board Lot Table determines the
minimum number of shares an investor can buy or sell at a specific price range. Therefore, the
minimum amount of initial investment varies and will depend on the market price of the stock as well
as its corresponding board lot. Prices of stocks move through a scale of minimum price fluctuations.
Table 1. Board Lot Table
Market Price (in Php)
Tick Size

Lot Size

0.0001 to 0.0099

0.0001

1,000,000

0.0100 to 0.0490

0.0010

100,000

0.0500 to 0.2490

0.0010

10,000

0.2500 to 0.4950

0.0050

10,000

0.5000 to 4.9900

0.0100

1,000

5.0000 to 9.9900

0.0100

100

10.0000 to 19.9800

0.0200

100

Market Price (in Php)

Let's

take

Tick Size

Lot Size

20.0000 to 49.9500

0.0500

100

50.0000 to 99.9500

0.0500

10

100.0000 to 199.9000

0.1000

10

200.0000 to 499.8000

0.2000

10

500.0000 to 999.5000

0.5000

10

1000.000 to 1999.000

1.0000

2000.000 to 4998.000

2.0000

5000.000 and UP

5.0000

look

at

the

illustration

below.

Buying
Transaction:
Mr. X wishes to buy a stock whose market price is P10.00. Based on the Board Lot Table, the
number of shares he can buy at a regular transaction should be in multiples of 100 shares. In this
case, if Mr. X wants to buy 1,000 shares (which is a multiple of 100 shares) his required cash
outflow will be as follows:

Market price/share
Number of shares to be bought

P
x
P

1,000
10,000.00

Broker's Commission* (0.25% + 12% VAT)

28.00

SEC Fee (Transaction Value x 0.005%)

0.50

PSE Transaction Fee (Transaction Value x

0.005%)

0.50

SCCP Fee (Transaction Value x 0.01%)

1.00

Total Cash Outlay

10.00

10,030.00

*Broker's commission varies depending on value of transaction, with a maximum allowable

commission
rate
of
1.5%
(please
refer
to
Table
2
below)
**If a buying client chooses to be issued and maintain a physical certificate in his/her name, an
upliftment/withdrawal fee of P50.00 per certificate issuance request and transfer fee of P100.00 +
12% VAT will be charged. In the illustration above, the combined upliftment/withdrawal fee and
transfer fee to be paid by the buying client will amount to P162.00 (P50.00 + P112.00).
Selling
Transaction:
Ms. Y wishes to sell a stock that is trading at P10.00. Based on the Board Lot Table, the number of
shares she can sell at a regular transaction should be in multiples of 100 shares. In this case, if Ms.
Y wants to sell 1,000 shares (which is a multiple of 100 shares), her cash inflow will be as follows:

Market price/share

Number of shares to be sold

x
P

10.00
1,000
10,000.00

Broker's Commission* (0.25% + 12% VAT)

28.00

Stock Transaction Tax** (Transaction Value x

0.5%)

50.00

SEC Fee (Transaction Value x 0.005%)

0.50

PSE Transaction Fee (Transaction Value x

0.005%)

0.50

SCCP Fee (Transaction Value x 0.01%)

1.00

Net Cash Receivable

9,920.00

*Broker's commission varies depending on value of transaction, with a maximum allowable

commission
rate
of
1.5%
(please
refer
to
Table
2
below)
**Stock
Transaction
Tax
levied
on
sellers
only
***If a selling client has certificates, he/she needs to have this converted into book-entry form in the
PCD system. A cancellation fee of P20.00 + 12% VAT and transfer fee of P100.00 + 12% VAT will
be charged. In the illustration above, the combined cancellation fee and transfer fee to be paid by
the
selling
client
will
amount
to
P134.40
(P22.40
+
P112.00).
TRADING/

TRANSACTION

FEES

AND

TAXES

Brokerage Commission

A stockbroker is compensated for his services in executing orders on the Exchange through commission charges,
which are paid by both the buyer and seller to their respective brokers.

For trade transactions covering equity and equity-related products, the maximum commission rate is 1.5% of the total
transaction cost plus 12% value added tax (VAT). The minimum commission rates depend on the amount of the transaction.
(See Table 2)

Upliftment/Withdrawal Fee

If a buying client opts for a stock certificate to be issued in his name, he must make the request through his broker who
will then issue the upliftment request through the PDTC system. Upon receipt, PDTC will then submit the request to the
transfer agent for the issuance of the certificate. PDTC will charge the broker an upliftment/withdrawal fee of Php50 per
certificate issuance request. The transfer agent will charge their usual issuance fee per certificate on top of PDTC's
upliftment/withdrawal fee.

Cancellation Fee

If a selling client has physical certificates, he must have the certificates converted into book-entry form in the PDTC
system by requesting, through his broker, for a direct transfer (DT) with the transfer agent, which costs Php100 (plus 12%
VAT) per certificate for the transfer of ownership of shares to PDTC Nominee Corporation (PCNC).

In addition to the DT fee, a client must pay cancellation fee of Php20 (plus 12% VAT) to the transfer agent for
cancellation of the certificates to be lodged in PDTC (for lodgment of shares). This is applicable only to listed equities.

Stock Transaction Tax

Sales of equities listed and traded on the Exchange are subject to a stock transaction tax of of 1% (50 basis points)
of the value of transaction charged to the seller, in lieu of the capital gains tax. The sale, barter or exchange of shares of
stock listed and traded at the PSE are exempt from documentary stamp tax.

Withholding Tax

Under the National Internal Revenue Code of 1997, and except in cases where tax treaties are in force, dividends
received from domestic corporations are subject to a withholding tax of 10% if the recipient is a citizen or resident alien,
20% if the recipient is a non-resident individual engaged in trade or business in the Philippines, 25% if the recipient is a nonresident individual not engaged in trade or business in the Philippines, and 30% if the recipient is a non-resident foreign
corporation. Dividends received by domestic and resident foreign corporations are not subject to tax. The rate of income tax
withheld on dividends paid to a non-resident foreign corporation may be reduced to 15% if the country in which the nonresident foreign corporation is domiciled (a) imposes no taxes on foreign-source dividends or (b) allows a credit against the
tax due from the foreign non-resident corporation for taxes deemed to have been paid in the Philippines equivalent to 15%
of such dividends.

10

Table 2. Schedule of Transaction Fees and Taxes Levied on Investors

Type of Fee
Rate

Brokerage Commission
(Min.)1

Transaction Value
Php100 million and below

0.25%

Above Php100 million up to

Php500 million

0.15% but not less than

Php250,000

Above Php500 million up to

Php1 billion

0.125% but not less than

Php750,000

Above Php1 billion up to Php5

billion

0.1% but not less than

Php1.25 million

Above Php5 billion up to Php10

billion

0.075% but not less than Php5

million

Above Php10 billion

0.05% but not less than

Php7.5 million

Upliftment/ Withdrawal Fee

Php50 per certificate

Cancellation Fee

Php20 + 12% VAT

Stock Transaction tax

0.5% of the value of transaction

Withholding Tax

Minimum Commission

Filipino citizen or resident alien: 10% of dividends received

Non-resident individual engaged in trade or business in the
Philippines: 20% of dividends received
Non-resident individual not engaged in trade or business in the
Philippines: 25% of dividends received
Non-resident foreign corporation: 30% of dividends received

Under Memo for Brokers No. 2008-0467, the minimum commission rates were made effective on October 6, 2008 and subject to further action by the

Securities and Exchange Commission.

11

All materials on this website are protected by copyright and intellectual property laws and are
the property of The Philippine Stock Exchange, Inc. Unless stated otherwise, you may access
and download the materials located on the website only for personal, non-commercial use.
2012 The Philippine Stock Exchange, Inc. All Rights Reserved.

Note: IPO announcements by

applicant-companies are not final
until an actual approval by the SEC
and PSE are issued.

12

MAIN BOARD

SME BOARD
GENERAL CRITERIA

a.
b.
c.
d.

The Applicant Company must have a positive stockholders' equity in the fiscal year immediately preceding the filing of the
listing application.
The Applicant Company operating history of at least three (3) years prior to its listing application.
The Applicant Company shall cause all its subscribed shares of the same type and class applied for listing to be paid in full.
The minimum offering to the public for initial listing shall be based on the following schedule:

Market Capitalization

e.
f.
g.

i.
ii.
iii.
iv.
v.
vi.
vii.

Public Offer

Not exceeding P500M

33% or P50M, whichever is

higher

Over P500M to P1B

25% or P100M, whichever is

higher

Over P1B to P5B

20% or P250M, whichever is

higher

Over P5B to P10B

15% of P750M, whichever is

higher

Over P10B

10% of P1B, whichever is

higher

When required by the Exchange, the Applicant Company shall engage the services of an independent appraiser duly accredited
by the Exchange and the Securities and Exchange Commission ("SEC") in determining the value of their assets.
The Applicant Company shall have an investor relation program to ensure that information affecting the company are
communicated effectively to investors. Such program shall include, at the minimum, a corporate website that contains, at the
minimum, the following information:

Company information - organizational structure, board of directors, and management team

Company news - analyst briefing report, latest news, press releases, newsletter (if any)
Financial report - annual and quarterly reports, at least for the past two (2) years
Disclosures - recent disclosures to PSE and SEC for the past two (2) years
Investor FAQs - commonly asked questions of stockholders
Investor Contact - email address for feedback/ comments, shareholder assistance and service
Stock Information - key figures, dividends, and stock information

TRACK RECORD REQUIREMENT

a.

b.
c.

13

A cumulative consolidated earnings before interest,

taxes, depreciation and amortization (EBITDA), excluding
non-recurring items, of at least P50 Million for three (3) full
fiscal years immediately preceding the application for listing;
A minimum EBITDA of P10 Million for each of the
three (3) fiscal years; and
The applicant company must be engaged in materially
the same business(es) and must have a proven track record of
management throughout the last three (3) years prior to the
filing of the application.

a.

b.
c.

A cumulative earnings before interest, taxes,

depreciation and amortization (EBITDA), excluding nonrecurring items, of at least P15 Million for three (3) fiscal
years immediately preceding the application for listing;
A positive EBITDA was generated in at least two (2)
of the last three (3) fiscal years, including the fiscal year
immediately preceding the filing of the application; and
The Applicant Company must be engaged in materially
the same business and must have a proven track record of
management throughout the last three (3) years prior to the
filing of the application for listing.

MAIN BOARD

SME BOARD

Exceptions to the 3-year track record

requirement:
(i). The Applicant Company has been operating
for at least ten (10) years prior to the filing of
the application and has a cumulative EBITDA
of at least P50 Million for at least two (2) of
the three (3) fiscal years immediately
preceding the filing of the listing application;
(ii). The Applicant Company is a newly formed
holding company which uses the operational
track record of its subsidiary. However, the
newly formed holding company is prohibited
from divesting its shareholdings in the said
subsidiary for a period of three (3) years from
the listing of its securities. The prohibition
shall not apply if a divestment plan is
approved by majority of the Applicant
Company's stockholders.

The Applicant Company shall demonstrate its

stable financial condition and prospects for
continuing growth by providing a business plan
indicating the steps that have been taken and to
be undertaken in order to advance its business
over a period of five (5) years.
As a general rule, financial projections are not
required, but should there be references made in
the business plan to future profits or losses, or
any other item that would be construed to
indicate forecasts, then the Applicant Company
is required to include financial projections in the
business plan duly reviewed by an independent
accounting firm.

MINIMUM CAPITAL REQUIREMENT

Minimum authorized capital stock of P500M, of
which, at least 25% is subscribed and fully paid.
At listing, the market capitalization of the
Applicant Company must be at least P500M.

Minimum authorized capital stock of P100M, of

which, at least 25% is subscribed and fully paid.

MINIMUM NUMBER OF STOCKHOLDERS

Upon listing, at least 1,000 stockholders each
owning stocks equivalent to at least one (1) board
lot.

Upon listing, at least 200 stockholders each

owning stocks equivalent to at least one (1)
board lot.

RESTRICTIONS
a.

b.

14

No divestment of shares in operating subsidiary - A

newly formed holding company which invokes the operational
track record of its subsidiary to qualify for the track record
requirement of profitable operations, is prohibited from
divesting its shareholdings in the said subsidiary for a period of
three (3) years from the listing of its securities. The prohibition
shall not apply if a divestment plan is approved by majority of
the Applicant Company's stockholders.
No secondary offering for companies invoking
exemption of track record and operating history requirements,
such as mining, petroleum and renewable energy companies
and newly formed holding companies during the initial public
offering.

a.
b.
c.

No listing of holding, portfolio and passive income

companies;
No change in primary purpose and/or secondary
purpose for a period of seven (7) years following its listing;
and
No offering of secondary securities for companies
exempt from the track record and operating history
requirements such as mining, petroleum and renewable
energy companies.

MAIN BOARD

SME BOARD
LOCK-UP

An Applicant Company shall cause it existing

stockholders who own an equivalent of at least
10% of the issued and outstanding shares of stock
of the company to refrain from selling, assigning
or in any manner disposing of their shares for a
period of:
(i). One hundred eighty (180) days after the
listing of said shares if the Applicant
Company
meets
the
track
record
requirements; or
(ii). Three hundred sixty-five (365) days after
listing of said shares if the Applicant
Company is exempt from the track record and
operating history requirements.
If there is any issuance or transfer of shares (i.e.,
private placements, asset for shares swap or a
similar transaction) or instruments which lead to
issuance of shares (i.e., convertible bonds,
warrants or a similar instrument) done and fully
paid for within One hundred eighty (180) days
prior to the start of the offering period, or, prior to
listing date in case of companies listing by way of
introduction, and the transaction price is lower
than that of the offer price in the Initial Public
Offering, or listing price for a listing by way of
introduction, all shares availed of shall be subject
to a lock-up period of at least Three hundred
sixty-five (365) days from full payment of the
aforesaid shares.

An Applicant Company shall cause its existing

stockholders to refrain from selling, assigning,
encumbering or in any manner disposing of their
shares for a period of one (1) year after the
listing of such shares.
If there is any issuance or transfer of shares (i.e.,
private placements, asset for shares swap or a
similar transaction) or instruments which lead to
issuance of shares (i.e., convertible bonds,
warrants or a similar instrument) done and fully
paid for within six (6) months prior to the start
of the offering period, or, prior to listing date in
case of companies listing by way of
introduction, and the transaction price is lower
than that of the offer price in the initial public
offering, or listing price for listing by way of
introduction, all shares subscribed or acquired
shall be subject to a lock-up period of at least
one (1) year from listing of the aforesaid shares.
The lock-up requirement shall be stated in the
Articles of Incorporation of the Applicant
Company.

The lock-up requirement shall be stated in the

Articles of Incorporation of the Applicant
Company.
All materials on this website are protected by copyright and intellectual property laws and are
the property of The Philippine Stock Exchange, Inc. Unless stated otherwise, you may access
and download the materials located on the website only for personal, non-commercial use.
2012 The Philippine Stock Exchange, Inc. All Rights Reserved.

15