Sept 15, 2010 (LBO) - Sri Lanka's listed stocks will be asked to ensure a minimum public float requirement on a continuing basis and all securities will be required to be deposited in a central depository, a regulatory official said.
"We will put out a consultation paper on the SEC website next week for stakeholders to comment," deputy director general of the Securities and Exchange Commission Malik Cader said.
"Basically the concept is to have on a continuing basis a minimum public float for companies listed on the Colombo Stock Exchange.
"Only at the time of listing we ask for a public float now."
Companies listing themselves on Sri Lanka's main board have to sell at least 25 percent of their stock to the public in an initial public offering.
Firms on the second board have to sell 10 percent.
But over time, it can reduce. Officials say a floor of around 15 percent could be considered for the main board.
However the so called 'free float' reduces not only because insiders buy back shares but also because investment funds and other outsiders accumulate shares.
The SEC wants stake holder feedback to develop an equitable process that will ensure that liquidity in stocks is maintained and also insiders are not unfairly burdened.
Cader says at the moment only about 60 percent of total stocks listed are deposited in the scripless central depository system.
But the SEC wants all listed securities to be deposited in the system.
"We will give time perhaps a year or more," Cader said.
"But new companies that are listing will have to deposit 100 percent of the stock in the depository."
source - www.lbo.lk
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