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Tuesday, July 19, 2011

Sri Lanka proposes 20-pct minimum public float for stocks

July 19, 2011 (LBO) - Sri Lanka's capital markets regulator has called for public comments on draft rules proposing a 20 percent minimum public float as a continuous listing requirement on the Colombo bourse.

The Securities & Exchange Commission said the draft rules, aimed at promoting a liquid, transparent market with a better price discovery mechanism, were prepared after considering comments received from the public during an initial public consultation process.

It has asked for comments on the draft by August 08, 2011.

According to the draft proposals, companies listed entity on the Colombo stock exchange's main board must maintain at least a public holding of 20 percent of their total listed shares in the hands of public shareholders.

Firms listed on the 'Diri Savi' second board must maintain at least a public holding of 10 percent of total listed shares in the hands of public shareholders.

Under transitional rules for existing listed companies having a public holding below prescribed levels, firms can raise the public shareholding by at least five percent a year.

The stock exchange may accept lower public floats for a limited time period if it is satisfied that it is enough for a liquid market in such shares.

Companies are required to have a minimum public float of 25 percent and 10 percent on the two boards only at the time of listing now, which can get reduced over time.

Under the draft rules, listed firms must immediately make a public disclosure when the public float falls below the prescribed threshold and how they plan to achieve it within a period of three months.

Listed firms which fall below the required level of a minimum public float can raise the public shareholding to the minimum level by issuing new shares to public, offering to sell shares held by the non-public shareholders to public, or making a rights issue.

Failure to comply with the proposed rules within the prescribed period will make listed firms liable to be transferred to the Default Board of Colombo stock exchange.

source - www.lbo.lk