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FINANCIAL CHRONICLE™ » DAILY CHRONICLE™ » CSE to implement minimum free float from January

CSE to implement minimum free float from January

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sriranga

sriranga
Co-Admin
The capital market watchdog Securities and Exchange Commission (SEC) is likely to issue a directive in early part of next year, setting out rules on the ‘minimum mandatory continuous free floating limits’ for Colombo Stock Exchange (CSE) listed companies, according to a top official.

SEC’s Officer in Charge (OIC) and Director Investigations Dhammika Perera said the directive would come as a blanket rule which must be applied by all listed entities— big or small, domestic or multinational.

The new rules will require a Main board listed company to maintain a minimum of 20 percent stake in the hands of the public while the requirement for a Diri Savi board listed company is 10 percent.

“Having said that, we do not expect all these companies to have their 20 percent or 10 percent stake in the hands of the public on the following day of the directive. We will give them some time to increase their existing public stakes to the stipulated levels over time. But eventually all will have to up their public free float to these levels,” he insisted.

The draft rules in the public consultation paper issued by SEC in September 2013 said they would allow two years from the effective date of the rules for all the listed entities to increase their public shareholding to the stipulated levels, but the increase must happen at least by 5 percent per annum.

Furthermore, SEC will have the discretion to reject or grant extensions for companies that fail to maintain the minimum public float. In the event of no further extension time is granted, those companies will be penalized by transferring them to the Default board.

However, the yet to be issued directive will have some leniency on Main board listed companies while some exemptions might be granted for them if the circumstances warrant.

“We might consider some of the requests on a case-by-case basis and they might be allowed some kind of leniency on the rule if the circumstances warrant. But no exemptions will be granted for Diri Savi board listed companies,” he added.

Mirror Business learns that exemption might be granted for entities whose market capitalization of the public float is maintained at minimum Rs.5 billion. But this will also depend on the number of shares and the percentage stake held by the public is in agreeable terms to the SEC.

The absence of a sizable free float is often cited as a deterrent to a more transparent and a liquid stock market. Hence the Colombo bourse is becoming less attractive for foreigners and foreign funds who seek easy exit whenever they want.

However the lack of liquidity in the Colombo bourse was also proved helpful to avert sudden massive capital outflows during the heightened Fed tapering fears this year. On the contrary, emerging markets like Indonesia, India and Brazil which have liquid capital markets saw massive outflows during the same period.

Setting up of minimum continuous free float limits has been on SEC’s agenda for the last three years and it never took off having twice called for the public comments back in September 2010 and July 2011.

“This time we received many representations for our consultation paper and we took all the measures to incorporate their concerns as much as possible in drafting the directive,” Perera said. (DK)
http://www.dailymirror.lk/mirror-stock-watch-live/40304-cse-to-implement-minimum-free-float-from-january-.html

http://sharemarket-srilanka.blogspot.co.uk/

prasadrmb

prasadrmb
Manager - Equity Analytics
Manager - Equity Analytics
Thank You

Leon


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics
To my mind, this will erode the chance to make some profit out of liquid shares. what you guys think??

4CSE to implement minimum free float from January Empty How possible to increase.... Wed Dec 18, 2013 8:48 pm

Jana

Jana
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
Minimum public Holding Rule

@sriranga wrote: http://forum.srilankaequity.com/t32074-cse-to-implement-minimum-free-float-from-january?highlight=minimum+public+holding


in the news they say....


“Having said that, we do not expect all these companies to have their 20 percent or 10 percent stake in the hands of the public on the following day of the directive. We will give them some time to increase their existing public stakes to the stipulated levels over time. But eventually all will have to up their public free float to these levels,” he insisted.


How possible to increase their existing public stakes without sell their 20 percent or 10 percent stake in the hands of the public?

Even if they split or any other way then the company also can get smae percentage again...isn't it ..

So how???

smallville

smallville
Associate Director - Equity Analytics
Associate Director - Equity Analytics
@Jana wrote:Minimum public Holding Rule

@sriranga wrote: http://forum.srilankaequity.com/t32074-cse-to-implement-minimum-free-float-from-january?highlight=minimum+public+holding


in the news they say....


“Having said that, we do not expect all these companies to have their 20 percent or 10 percent stake in the hands of the public on the following day of the directive. We will give them some time to increase their existing public stakes to the stipulated levels over time. But eventually all will have to up their public free float to these levels,” he insisted.


How possible to increase their existing public stakes without sell their 20 percent or 10 percent stake in the hands of the public?

Even if they split or any other way then the company also can get smae percentage again...isn't it ..

So how???

Issuing Rights would do.. Only thing is; the company doesnt subscribe to rights, they can just trade theirs also in the open market  Laughing 

Jana

Jana
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
@smallville wrote:
@Jana wrote:Minimum public Holding Rule

@sriranga wrote: http://forum.srilankaequity.com/t32074-cse-to-implement-minimum-free-float-from-january?highlight=minimum+public+holding


in the news they say....


“Having said that, we do not expect all these companies to have their 20 percent or 10 percent stake in the hands of the public on the following day of the directive. We will give them some time to increase their existing public stakes to the stipulated levels over time. But eventually all will have to up their public free float to these levels,” he insisted.


How possible to increase their existing public stakes without sell their 20 percent or 10 percent stake in the hands of the public?

Even if they split or any other way then the company also can get smae percentage again...isn't it ..

So how???

Issuing Rights would do.. Only thing is; the company doesnt subscribe to rights, they can just trade theirs also in the open market  Laughing 

yes possible idea.. (Good)  Very Happy 

and if they hold more than 80% or 90% then easily push up the share price and dump 20% to the public ..easy way...

anyhow illiquid stocks have some chances to make money isn't it ???

mark

mark
Expert
Expert
@Jana wrote:
@smallville wrote:
@Jana wrote:Minimum public Holding Rule

@sriranga wrote: http://forum.srilankaequity.com/t32074-cse-to-implement-minimum-free-float-from-january?highlight=minimum+public+holding


in the news they say....


“Having said that, we do not expect all these companies to have their 20 percent or 10 percent stake in the hands of the public on the following day of the directive. We will give them some time to increase their existing public stakes to the stipulated levels over time. But eventually all will have to up their public free float to these levels,” he insisted.


How possible to increase their existing public stakes without sell their 20 percent or 10 percent stake in the hands of the public?

Even if they split or any other way then the company also can get smae percentage again...isn't it ..

So how???

Issuing Rights would do.. Only thing is; the company doesnt subscribe to rights, they can just trade theirs also in the open market  Laughing 

yes possible idea.. (Good)  Very Happy 

and if they hold more than 80% or 90% then easily push up the share price and dump 20% to the public ..easy way...

anyhow illiquid stocks have some chances to make money isn't it ???


ya jst lyk ALUF done, pushed the prices and sold the rights. remember?

Jana

Jana
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
@mark wrote:


ya jst lyk ALUF done, pushed the prices and sold the rights. remember?

ya I remembered.. that time I had some ALUF as well ... I made money from it...

you know MARK ..CLPL also hold more than 90% so they need to do some think... and  my COMD also 95% holding,,,

mark

mark
Expert
Expert
@jana-i was a looser in ALUF R Sad Damn that bugger sold his rights at open market and made the price go to hell.

about CLPL- it may move to 75 level in short term, Yet worrying about lower selling pressure in CLPL W and yet finding prices and volume to re enter. Smile

D.G.Dayaratne


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
Will this effect share prices of of companies which have lees than 20%
public holdings ?

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