31 firms to comply with CSE’s minimum public float rules
Some 31 listed firms out of 59 are non-compliant with the minimum public float rule of the Colombo Stock Exchange (CSE).
Of the other 28 that subsequently adhered to the rules, some increased their public float with certain directors selling down and some stepped down from the main CSE board to its second board – the Diri Savi board.
Most recently two firms – Bimputh Finance PLC (Bimputh) and Singer Finance PLC – complied when directors disposed shares so that these firms can meet CSE’s minimum public float criteria.
Bimputh on September 9 announced that they were compliant with minimum public float requirements when its Deputy Chairman and Acting CEO disposed nearly 2.7 million shares in the company. Now their public float is at 10 per cent from the earlier 7.5 per cent.
Sri Lanka Telecom PLC on August 13 proposed a private placement to meet minimum public shareholding requirement of CSE. Carson Cumberbatch PLC firms – Indo-Malay PLC, Good Hope PLC and Selinsing PLC are gearing to delist from the CSE.
Two firms – Kalpitiya Beach and Ceylon Leather Products – delisted as a part of their internal restructuring. Shareholders of two more firms – Property Development PLC (PDL) and AIA Sri Lanka – shot down a voluntary offer made by their majority shareholders directed towards delisting and taking the company private. PDL majority shareholder Bank of Ceylon (BOC) has 95.55 per cent in PDL leaving the public float at an alarming less than 5 per cent.
AIA is a slightly different story. Sri Lanka Insurance Regulatory Commission in July said that AIA Sri Lanka is exempted from being listed on the CSE as its parent remains a listed firm on the Hong Kong Stock Exchange. As such the AIA Sri Lanka director board made arrangements with its major shareholder, the Hong Kong-based AIA Company Ltd, to buy the ordinary voting shares of AIA Sri Lanka from the shareholders who may wish to divest them at a price of Rs.1, 000 per share and ultimately take the company private. But shareholders didn’t pass this resolution.
Some firms are much worse as their public float is dangerously low and thus there isn’t a point in them being listed. Trade Finance (0.32 per cent), Asia Capital (5.13 per cent), Odel (2.49 per cent), Kotmale Holdings (0.49 per cent), BRAC Lanka Finance (0.24 per cent), Colombo Trust Finance PLC (1.1 per cent), etc are some firms that aren’t compliant now.
The Securities and Exchange Commission approved minimum public float rules that represent the portion of shares of a listed firm that are in the hands of public investors as opposed to shares owned by a company’s institutional shareholders in 2016. The rationale for a minimum float is that a sizeable public float is a necessity to ensure a market that is fair, orderly and efficient, and introduction of a minimum public float as a continuous listing requirement is considered by all regulators in order to promote liquidity and ensure a better price discovery mechanism. But this hardly happened.