Walton, Berger & ICB ordered to ensure 10% free-float shares within a year

The Bangladesh Securities and Exchange Commission (BSEC) has ordered three large-cap companies to ensure 10% free-float shares within the next year.

The companies are electronics giant Walton Hi-Tech Industries, state-owned investment firm Investment Corporation of Bangladesh (ICB), and Berger Paints Bangladesh, confirmed BSEC spokesperson and also its Executive Director Rezaul Karim.

BSEC sent the relevant letters to the companies on Sunday. 

According to those BSEC letters, the sponsor-directors will offload from their existing stake in the market at the prevailing price and they can sell a maximum of 1% of the company shares in a month. The companies will submit their updates to the BSEC at the end of each month until full compliance is met.

According to the Dhaka Stock Exchange, Berger Paints Bangladesh has only 5% free-float shares held by outsiders which can be traded without prior declaration and the company's sponsor-directors will have to offload 5% more shares.

Only 3.19% of ICB are free-float shares and the sponsor-directors are to offload 6.81% shares in the next 12 months.

On the other hand, Walton did not have to float even 1% of the company shares in its initial public offering last year, as the investors paid a high price for the company's primary shares in the book building method of IPO.

The feel for a fair amount of free-float shares prominently emerged as Walton shares skyrocketed after its debut a year ago.

Now, Walton entrepreneurs and directors will have to sell 9.03% of the company shares to decrease 10% of their fortune.

Earlier, amending the public issue rules, BSEC made it mandatory for companies to offload at least 10% shares.

Poor free-float hinders shares supply during trading that often abnormally fuels stock price.

On the flip side, however, sponsor-directors also have to collectively hold 30% of company shares in Bangladesh as the regulator wants to ensure their maximum efforts for the company.