M&A deals in the Philippines have shown resilience despite the challenges of the pandemic. Several reforms to the regulatory landscape were implemented which relaxed the stringent foreign equity restrictions and opened several industries to foreign participation, such as retail trade and the renewable energy sector. The regulatory measures have been successful in attracting more capital from foreign investors and resulted in an increase in M&A transactions involving these industries.
Due to an increase in digital technology use during the pandemic, there was also notable focus on transactions involving digital and technology-oriented companies. Further, the pandemic highlighted the importance of healthcare infrastructure and logistics services. The Philippine government’s renewed focus and commitment on improving these sectors continues to bring in more private investors looking for opportunities.
The increased thresholds for mandatory merger notification under the Bayanihan to Recover as One Act (BARO) expired on 15 September 2022. The new thresholds for merger notification triggered an increase in the number of M&A transactions notified to the Philippine Competition Commission (PCC). Compared to 2021, when four M&A notifications were received by the PCC, the number of such notifications increased to seven in 2022. The aggregate value of these transactions was PHP320 billion and three of them were approved. The sectors involved were finance and insurance, information and communication, manufacturing and transportation and storage.
It was reported that M&A transactions in the Philippines amounted to USD8.1 billion (around PHP445 billion) in 2022. The top sectors involved in 2022 M&A transactions were:
As the Philippine economy continues to open, with the legislative agenda appearing to favour more foreign investments, M&A transactions in the following industries can be expected to grow in number:
Although the Philippine economy is expected to grow due to recent legislative initiatives favouring foreign investments, the current high inflation rates in the country, brought about by the COVID-19 pandemic and other political and non-political factors, have made M&A transactions more challenging. Businesses are becoming increasingly worried about the combination of rising costs and low returns, along with the uncertainty surrounding the reliability of past financial records of potential targets as accurate indicators of their true profitability and valuation.
Public Service Act (PSA)
On 21 March 2022, the PSA, as amended, liberalised certain industries from foreign equity restrictions and introduced regulations for critical infrastructure. In particular, under the amended PSA, full foreign ownership shall now be allowed for ventures in, among others, telecommunications, domestic shipping, air carriers, railways and subways, and canals and irrigation, subject to any applicable regulations.
The PSA Amendment also provides that foreign nationals are not allowed to own more than 50% of the capital of entities engaged in the operation and management of critical infrastructure unless the country of such foreign national accords reciprocity to Philippines nationals, as may be provided by foreign law, treaty or international agreement. The law also grants the President, in the interest of national security, the power to suspend or prohibit a merger, acquisition or investment in a public service that effectively results in the grant of control, whether direct or indirect, to a foreigner or a foreign corporation.
Based on the PSA Amendment, critical infrastructure refers to any public service that owns, uses or operates systems and assets, whether physical or virtual, that are so vital to the Republic of the Philippines that the incapacity or destruction thereof would have a detrimental impact on national security, including telecommunications and other vital services as may be declared by the President of the Philippines.
Amended Foreign Investments Act (FIA) and Retail Trade Liberalisation Act (RTLA)
Under the amended FIA, foreign corporations are now also allowed to engage in small and domestic market enterprises, subject to capital requirements. Foreign entities that intend to engage in business as a Domestic Market Enterprise are generally required to have a minimum paid-in capital equivalent to USD200,000. However, a Domestic Market Enterprise is only required to have a minimum paid-in capital equivalent to USD100,000 if it meets any of the following requirements:
The revised RTLA lowered the minimum paid-in capital requirement for foreign retailers from at least USD2.5 million to USD500,000 or PHP25 million.
Corporate Recovery and Tax Incentives for Enterprises Act (“CREATE Act”)
In 2021, the CREATE Act was enacted into law and amends the Tax Code by reducing the Philippine corporate income tax and rationalising investment tax incentives by consolidating such incentives embodied in more than 300 different laws into a single Title XIII of the Tax Code. The most salient revisions include the following:
The reduction in the corporate income tax and the grant of uniform incentives to qualified enterprises are expected to promote investments in Philippine corporations and thus stimulate the M&A market.
Amended Rules and Regulations of the Renewable Energy Act of 2008
On 8 December 2022, the Department of Energy (DOE) Department Circular No. 2022-11-0034 (“DOE Circular”) took effect and removed certain limitations on foreign participation in the exploration, development, and utilisation of the Philippines’ renewable energy sector. The DOE Circular now allows 100% foreign investment in certain renewable energy sectors, such as solar and wind energy. Hydropower generation, however, remains to be subject to the nationality limitations.
PCC Notification Thresholds
The PCC has set a new notification threshold, which took effect on 1 March 2023, after the period imposing a PHP50 billion notification threshold under BARO had lapsed. Notification is compulsory if the transaction breaches the following mandatory notification thresholds: (i) the aggregate annual gross revenues in, into or from the Philippines, or value of the assets in the Philippines of the ultimate parent entity (UPE) of at least one of the acquiring or acquired entities, including that of all entities that the UPE controls, directly or indirectly, exceeds PHP7 billion (“Size of the Party Test”); and (ii) the value of the transaction exceeds PHP2.9 billion (“Size of the Transaction Test”).
The revised thresholds, however, do not apply to transactions pending review by the PCC, notifiable transactions completed before 1 March 2023, and transactions already subject of a decision by the PCC.
PCC Exemptions From Notification
The PCC has considered internal restructurings to be exempt from notification requirements since 2016, and in 2020 also issued rules to secure an exemption from notification for Unsolicited Projects undertaken by agencies of the national government pursuant to the Build-Operate-Transfer Law and its Implementing Rules and Regulations. In 2021, the PCC also issued guidelines for proceedings before the PCC during periods of community quarantine.
Bureau of Internal Revenue (BIR) Clarification on the Determination of the Fair Market Value of Shares of Stock of Companies not Listed on the Stock Exchange
In August 2020, the BIR issued Revenue Regulation No 20-20, which clarified that the determination of the fair market value of shares of stock in companies not listed on the stock exchange shall now be based on the book value of the shares as provided in the Audited Financial Statements of the company prior to the date of sale, but not earlier than the immediately preceding taxable year.
This regulation modifies the prior requirement of using the Adjusted Net Asset Method for determining the fair market value of such shares. This development is expected to simplify negotiations over tax provisions in Philippine M&A transactions.
Under Philippine law, there is no centralised regulatory authority governing all aspects of M&A transactions. However, depending on the transaction, the Securities and Exchange Commission (SEC), the PCC and the Department of Justice (DOJ) may play a role.
The SEC is the primary regulatory authority for Philippine corporations. Prior approval from the SEC is required for any amendments to a corporation’s articles of incorporation that may be necessitated by a transaction, including the following:
The SEC also oversees the approval of mergers and consolidations, and monitors compliance with nationality restrictions in the applicable industries, as provided under the Foreign Investment Negative List.
The PCC is the government authority primarily responsible for maintaining market competition and regulating anti-competitive conduct. It is responsible for overseeing, regulating and reviewing any anti-competitive aspects relating to mergers, acquisitions and the creation of joint ventures.
Specifically, the PCC has jurisdiction over “acquisitions” that involve the purchase or transfer of securities or assets, through contract or by other means, for the purpose of obtaining control by either:
For such purpose, “control” as defined refers to the ability to substantially influence or direct the actions or decisions of an entity, whether by contract, agency or otherwise. Control is presumed to exist when the acquisition will result in the parent of the acquiring entity owning directly or indirectly, through its subsidiaries, more than half of the voting power of the entity to be acquired. Asset acquisitions that result in an acquiring entity being in a position to replace the acquired entity in at least a part of the relevant business, or that allow an acquirer to build up a market presence or develop market access within a reasonably short period of time, are also regulated by the PCC.
Establishing the need for compulsory notification
A merger/acquisition is subject to compulsory notification to the PCC, if the threshold of PHP7 billion is met for the Size of Party Test and the the threshold of PHP2.9 billion is met for the Size of Transaction Test.
A PCC review is conducted in two phases. The Phase 1 review lasts for a maximum of 30 days from complete notification and payment, and involves an assessment to determine if the acquisition raises any competition concerns that would warrant a more detailed review. If no competition concerns are raised, the acquisition may be cleared within the Phase 1 period of review.
If the PCC is unable to conclude that the merger/acquisition does not raise competition concerns after conducting a Phase 1 review, it will give the merger parties a notice and request for additional information for the purpose of commencing a Phase 2 review. The more detailed inquiry into the transaction during the Phase 2 review shall be completed within 60 days.
The applicable thresholds, however, are subject to further issuances and guidance from the PCC.
The DOJ monitors compliance with Philippine nationality restrictions in applicable industries. The breach of such nationality restrictions is penalised under the Philippine Anti-Dummy Law.
The DOJ also regulates the grant of authority to employ foreign technical employees in a wholly or partially nationalised trade, business, industry or undertaking, pursuant to the Anti-Dummy Law. It must be noted, however, that foreign employees who seek to work in the Philippines are separately governed by permit and visa requirements as regulated by the Department of Labour and Employment and the Bureau of Immigration, respectively.
Other Regulatory Agencies
Other regulatory approvals may also need to be secured from different regulatory agencies, depending on the nature of the industry of the target company. This may include approvals from the National Telecommunications Commission, the Department of Energy, the Civil Aeronautics Board and the Department of Environment and Natural Resources, among others.
Approvals may also need to be secured from the appropriate investment promotion agency, such as the Board of Investments and the Philippine Economic Zone Authority, if applicable.
Anti-bribery and ESG Provisions
There have been no substantial changes to Philippine regulations on anti-bribery, sanctions and ESG compliance in 2022 and the first half of 2023. Thus, the relevant criminal laws and regulatory requirements governing these fields continue to apply.
The offences of bribery and corruption of public officers are generally punished under the Revised Penal Code. Republic Act No 3019 (or the Anti-Graft and Corrupt Practices Act) is the main anti-corruption law in the Philippines, which penalises certain unlawful acts of public officers that are deemed corrupt practices.
Other laws that prohibit/penalise corrupt practices by public officers are Republic Act No 6713 (the Code of Conduct and Ethical Standards for Public Officials and Employees), Presidential Decree No 46 (Giving of Gifts on any Occasion) and Republic Act No 7080 (Plunder).
The board of directors of the company should have a clear and focused policy on the disclosure of non-financial information, with emphasis on ESG. In relation to this, the SEC has required publicly listed companies (PLCs) to attach sustainability reports (ie, on ESG compliance procedures) to their annual reports. Starting from 2023, the SEC will start penalising PLCs that fail to follow this requirement. The requirement does not apply to non-PLCs.
The key areas of focus for the preparation of due diligence reports for equity acquisitions are as follows:
Due diligence is commonly conducted through the review of documents provided in a virtual data room, and may also involve an independent verification of land titles and cases in litigation. Focus is also placed on analysing all prior consents, notifications or approvals that must be complied with prior to the acquisition.
Typically, buyers engage their own legal, financial and operations consultants to conduct due diligence. It is uncommon to rely on due diligence provided by the vendor, even if it is coupled with representations and warranties. However, in auction sales, sell-side legal advisers typically provide an information memorandum or fact-books to provide comprehensive information about the target company being sold and its legal standing and ensure transparency for potential buyers. The information memorandum is a comprehensive document that provides an overview of the target company, its business operations, financial performance, industry analysis and future prospects. The fact-books, on the other hand, are supplementary documents that contain detailed information on specific aspects of the business, such as material contracts, real estate ownership or other relevant operational details.
In some cross-border transactions, advisers agree to provide copies of their due diligence report on a reliance basis, albeit imposing a cap on potential liability. More often, when requested, reports are shared only on a non-reliance basis.
In the Philippines, acquisitions of non-publicly listed companies are most commonly carried out through a private agreement for the purchase and sale of shares of stock, negotiated between the seller and the buyer. This private contract allows for the greatest flexibility to negotiate each party’s representations and warranties, and any possible indemnity for breach.
However, if the target of an acquisition is under court rehabilitation, the participation of the rehabilitation receiver and the approval of the rehabilitation court is required.
For publicly listed companies, a minimum tender offer is required if any of the requirements detailed in 7.3 Mandatory Offer Thresholds are met.
Acquisitions by private equity funds are primarily structured through the creation of a special purpose vehicle. In some instances, the private equity fund is typically involved with local counsel in negotiating the sale documents or conducting due diligence, whether directly or through its international counsel.
In the Philippines, private equity transactions are commonly financed directly by the private equity investor from its own capital. In larger transactions, it is more common for the deal to be financed through a combination of the private equity investor’s capital and loans from local or foreign banks. For the equity-funded portion of the purchase price, it is not common practice to have an equity commitment letter. However, it is common to have certain debt funds committed at signing. Comfort regarding the debt-funded portion of the purchase price is given through a commitment letter from a lender, proof of pre-arranged financing, or by depositing funds into an escrow account. Letters of guarantee may also be utilised for added assurance.
Deals involving a consortium of private equity sponsors or club deals are not common in the Philippines. Deals involving a consortium comprising of a private equity fund and a corporate investor are more common, particularly transactions involving foreign private equity funds, as they usually partner with Philippine corporations or conglomerates for credibility and experience in local deals.
Various consideration structures are common in the Philippine M&A market, including the locked-box, completion accounts and fixed price mechanisms.
Generally, locked-box and fixed price mechanisms are more common in the Philippines. However, M&A transactions with a longer duration between the signing date and the closing date occasionally adopt a completion accounts mechanism to ensure a more accurate valuation of the target company by the closing date. While earn-outs, deferred consideration and roll-over structures are occasionally adopted in M&A transactions, such provisions may require active negotiations as they are not common in the Philippines.
For locked-box transactions, leakage protection commonly includes restrictions being imposed on the target company preventing corporate actions outside the ordinary course of business of the target company, such as the payment of dividends, the grant of bonuses, the pre-payment of loans or the creation of any liens over corporate assets. These restrictions are commonly included as negative covenants by the target company under the pertinent transaction agreement.
Protection levels tend to be similar between transactions involving a private equity-funded buyer and a purely corporate buyer.
In Philippine M&A transactions adopting a locked-box consideration mechanism, sellers may impose an interest on the purchase price as consideration for their continued support to the business, resulting in an increase in value during the locked-box period. However, it is not common for interest to be charged on leakages. Violations by the target company of its negative covenants designed to prevent leakages are more commonly subject to a specific indemnity provision.
In the Philippines, it is common to have an expert determination or other dispute resolution mechanism in place for resolving disputes relating to the transaction, including consideration-related disputes. Generally, a typical dispute resolution mechanism would include discussions in good faith between the parties to resolve any disputes within a specified period; if the parties fail to reach an agreement on the dispute within the specified period, the dispute may be referred to arbitration.
In certain cases, an intermediary dispute resolution step is added before referral to arbitration. This step involves submitting the dispute for the resolution by an expert independent third party, such as an accounting firm mutually selected by both parties. The expert determination or dispute resolution mechanism does not significantly differ notwithstanding the different types of consideration structures used.
It is common for the following matters to be included as conditions precedent for the completion of an M&A transaction in the Philippines:
The completion of financing transactions can also be included as a condition precedent in certain transactions, although it is uncommon.
It is common to have a liquidated indemnity and/or breach provision for any material adverse changes affecting the parties to the transaction.
“Hell or high water” undertakings are uncommon in the Philippines. Regulatory approval-related risks are commonly mitigated by a covenant to file any submissions required for government regulatory approval within a specified time, and a liquidated indemnity and/or breach provision for failure to comply with such covenant.
Break fees payable by the seller and reverse break fees payable by the buyer are not common in private equity transactions in the Philippines. Under Philippine law, such break fees may be stipulated as liquidated damages to be paid upon breach of the provisions of the agreement pertinent to the M&A transaction, including but not limited to, failure to secure the conditions precedent.
While the grounds for termination may vary depending on the transaction, it is common for the pertinent M&A transaction documents to stipulate that the private equity seller or buyer may terminate the acquisition agreement upon the occurrence of the following circumstances:
Risk allocation is usually thoroughly negotiated between the seller and the buyer, and depends on specific circumstances surrounding a transaction. Risks identified during the course of the legal due diligence commonly lead to an increase in purchase price, or may in some instances require the inclusion of an indemnity provision requiring the seller to indemnify the buyer in order to cover the risk if the identified risk event is triggered.
The allocation of risk does not generally differ in transactions covering only purely corporate M&A and transactions involving private equity funds.
Generally, representations and warranties for M&A transactions involving private equity funds do not differ significantly from purely corporate M&A. Common representations and warranties include that:
Full disclosure of the data room is not common in the Philippines, with exceptions for representations and warranties being carved out through disclosure schedules, when applicable.
Limitations on liability may include caps on indemnity or the introduction of fixed periods for the expiration of certain indemnity provisions. Materiality thresholds may also be introduced before an indemnity provision is triggered.
Apart from the indemnity protections discussed in 6.8 Allocation of Risk and 6.9 Warranty and Indemnity Protection, other protections commonly included in acquisition documentation are a separate specific indemnity for pre-completion tax liabilities and tax liability-related risks. It is generally not common for there to be an escrow account in place from which the indemnity may be drawn.
Warranty and indemnity insurance is not commonly used in Philippine M&A transactions.
Litigation is generally not common in private equity M&A transactions in the Philippines, as the common dispute resolution mechanism provides multiple opportunities for the parties to reach an amicable settlement before resorting to arbitration.
However, the more commonly disputed provisions relate to breaches of covenants, representation and warranties, and indemnification provisions.
There have been some public-to-private transactions in the Philippines, but the conversion of publicly listed companies to private companies is not common in the Philippines, given the low number of publicly listed corporations.
Disclosure by Beneficial Owner
Any person who acquires beneficial ownership of 5% of any class of securities of a publicly listed company is required to make a disclosure to the company, the exchange where the security is traded and the SEC within five business days of such acquisition. Such beneficial owner is also required to submit an amendment to their disclosure to the company, the exchange and the SEC in the event of any change in the facts set forth in the disclosure.
Disclosures by Directors, Officers and Principal Stockholders
Every person who is directly or indirectly the beneficial owner of 10% or more of any class of any security of a publicly listed company or a director or officer of such publicly listed company shall make an appropriate disclosure to the SEC and the exchange in the following circumstances:
Such person shall also be required to notify the SEC when their direct or indirect beneficial ownership falls below 10%, or if they cease to be an officer or director of the company.
Tender Offer-Related Disclosures
Any person or group of persons acting in concert that intends to acquire 15% of equity securities in a public company in one or more transactions within a period of 12 months must file a declaration to that effect with the SEC.
If such person or group of persons acting in concert intends to acquire 35% of equity securities in a public company in one or more transactions within a period of 12 months, a mandatory tender offer (see 7.3 Mandatory Offer Thresholds) shall also be required, in addition to the requirement to file a declaration with the SEC.
Under the Securities Regulation Code and its Implementing Rules and Regulations, any person or group of persons acting in concert is required to make a tender offer if the following thresholds are met:
In computing whether the thresholds for the mandatory tender offer are met, both direct and indirect acquisitions are considered.
Mandatory tender offer requirements shall not apply to mergers or consolidations.
Private equity M&A transactions in the Philippines commonly require cash as the form of consideration. Shares are typically used as consideration in corporate restructurings or reorganisations that are preliminary to the main M&A deal.
Philippine law does not specifically impose regulations on closing conditions for private equity-backed takeovers; such takeovers are treated in the same manner as regular M&A transactions. The parties have the freedom to stipulate the offer conditions for the takeover, which may involve amendments to the target company’s articles of incorporation and by-laws. The parties are generally free to stipulate security measures such as break fees, match rights, and non-solicitation provisions.
In takeovers of publicly listed corporations, it is common to require as a condition precedent that the tender offer process as required by the applicable regulations must first be completed.
Common deal security measures are exclusivity and non-solicitation provisions, although break fees are possible.
In addition to the voting rights acquired by the private equity investor in the target company, the following additional governance rights may be granted to the private equity investor upon the execution of a shareholders’ agreement and the amendment of the articles of incorporation of the target company:
Minority shareholders may be further diluted through the offering of new primary shares, subject to compliance with pre-emptive rights, where they exist.
In the case of a tender offer required pursuant to an offer to acquire shares directly from one or more shareholders, the execution of a definitive agreement with such shareholders triggers the tender offer process. Such definitive agreements may require the offer to sell the shares to the purchaser to be irrevocable, subject to compliance with the applicable tender offer regulations, if so stipulated.
Ensuring the retention of high-level managers after an acquisition through equity participation incentives is common in the Philippines. Equity ownership of management varies among companies.
Management participation arrangements are more common in cross-border deals, where retained management are given an option to acquire shares after a vesting period. The incentives granted to management vary depending on the specific deal and parties involved, but these are normally structured through the issuance of preferred shares which provide certain advantages and preferences to the holders thereof.
Vesting provisions are typical for management equity. However, the vesting periods vary among transactions.
In the Philippines, it is common to require managers and high-level employees to execute agreements with restrictive covenants that become applicable upon their departure from the company. These include non-compete, non-solicitation and non-disparagement undertakings which are usually incorporated in employment contracts or other supplementary agreements.
However, case law prohibits a non-compete clause that is unduly harsh or oppressive in curtailing the legitimate efforts of an employee to earn a livelihood. Hence, non-compete clauses must be reasonable in their limitations regarding time, trade and place.
Case law has upheld the validity of non-compete clauses with a restriction of up to two years. The non-compete clause must identify only the specific type of business the departing management shareholder is to be restricted from joining. Case law requires that a provision on territorial limitation, which must be co-extensive with the business of the company, is necessary to guide an employee on what constitutes a violation of the restrictive covenant.
Such restrictive covenants may be enforced by demanding the payment of damages or by seeking injunctive relief from the courts.
It is uncommon to grant minority protection to manager shareholders as such. It is more common to see minority protection for the minority shareholder in an M&A deal. If granted, management shareholders would enjoy the same minority protection rights granted by the Revised Corporation Code to ordinary minority shareholders, which include the following:
Apart from these minority protections, management shareholders may also seek the inclusion of tag-along rights in the applicable shareholders’ agreement. It is likewise common for shareholders to be granted a right of first refusal if another shareholder decides to sell their shares; this right shall be specified in the articles of incorporation or by-laws of the corporation as a measure to protect existing shareholders.
The level of shareholder control will usually depend on the size of the investment of the private equity fund shareholder. However, it is common for private equity funds to provide for the following control provisions to protect their investments:
Shareholders also have the right to inspect the books and records of the company, and to be furnished with the most recent financial statement/financial report. Corporate records shall be open to inspection by any director, trustee, stockholder or member of the corporation in person or by a representative, subject to the requirements of the Revised Corporation Code.
As a rule, Philippine law adheres to the doctrine of a separate juridical personality, such that the portfolio company is considered to be separate and distinct from its shareholders.
However, according to case law, the corporate veil may be pierced if, based on the totality of circumstances, it can be determined that said veil has been used to shield fraud, defend crime, justify a wrong, defeat public convenience, insulate bad faith or perpetuate injustice.
Furthermore, a shareholder will be liable to pay their unpaid subscriptions owed to the corporation, depending on the subscription contract. If left unpaid after demand, the shares become delinquent and may be subjected to sale by the corporation.
The typical holding period for private equity transactions will depend on the company, and may range from three to six years. The most common form of private equity exit is through a purchase and sale of shares through a private agreement. The marketability of the offer to sell the shares of the private equity investor is improved through the exercise of a tag-along or drag-along right, if available.
IPOs, “dual-track” exit strategies (involving an M&A sale together with an IPO), “triple-track” exit strategies (M&A sale, IPO and recapitalization), and other forms or variations of equity exit are not common in the Philippines; reinvestment by private equity sellers upon exit is also not a common practice in the Philippines.
Shareholders’ agreements involving private equity shareholders and management shareholders will commonly feature drag-along rights as an exit mechanism for the private equity fund. Typically, the threshold for triggering the drag-along right is the sale of a controlling share in the company.
Shareholders’ agreements also grant the private equity shareholders a tag-along right which allows them to sell their shares in the event of the sale of all of the shares held by the private equity fund, improving the marketability of the sale of shares for the private equity fund’s exit from the company. Similar to a drag-along right, a tag-along right is usually triggered in the event of a substantial change in ownership.
Drag and tag rights typically exhibit similarities in their application for both management and institutional co-investors.
As an exit strategy, IPOs are not common in the Philippines, considering that only a small number of Philippine corporations are listed on the Philippine Stock Exchange (PSE) and publicly traded. The greater majority of Philippine corporations are not publicly listed companies.
The PSE’s listing and disclosure rules impose a lock-up period, the duration of which depends on whether the listing is made under the Main Board or the Small, Medium and Emerging (SME) Board. For listing with the Main Board, the lock-up period for shareholders holding at least 10% of the issued and outstanding shares of stock in a company seeking to be listed with the PSE is 180 days if the company complies with the track record requirements; otherwise it is 365 days.
For listing under the SME Board, the lock-up period is generally one year.
The SEC has recently approved amendments to the lock-up rule. As provided in PSE Memorandum No 2022-0003, the amended lock-up rule now allows alternative investment funds or their investment vehicles with demonstrated track records in private equity investments to sell during an IPO the shares that they acquired within 180 days prior to the IPO at a price lower than the IPO price, subject to the conditions set out in the rule.