Accounting Alerts

Guidelines for Cornerstone Investors in Initial Public Offerings

This Accounting Alert is issued to circulate SEC Memorandum Circular No. 8 dated April 11, 2024 which provides guidelines for cornerstone investors which have been a feature in some Initial Public Offerings (IPO) in the Philippines and in various jurisdictions.

A cornerstone investor is an investor in an IPO of a registrant's shares to whom offer shares are preferentially placed with a guaranteed allocation at the final offer price, provided that, the final offer price is within the offer price range preferred by the cornerstone investor and agreed with the issuer.

Guidelines

  • The allocation to a cornerstone investor shall be guaranteed in a cornerstone agreement which must be signed at the latest on or prior to the pricing event of the initial public offering. Cornerstone investment agreements shall form part of the material contracts in the issuer’s registration statement required to be submitted to the Commission.
  • The issuer shall ensure that cornerstone investors are not provided with any material information beyond what is available to the public and/or that to be contained in the final prospectus.
  • The following information shall be disclosed in the issuer's final prospectus: a) number of participating cornerstone investors and their respective profile descriptions; b) number and type of securities proposed to be issued or offered to cornerstone investors; and c) such other information relevant to the cornerstone investment.

Please see attached circular for further information.