Listed companies can now split their stocks more than once a year under new simplified procedures
REGULATION WATCH- Listed companies can now split their stocks more than once a year under new simplified procedures: The EGX’s board of directors approved a decision last week that allows listed companies to split their stocks as many times a year as they want, as opposed to only once previously, the bourse said in a Thursday statement (pdf). Companies will not be required to apply for regulatory approval as long as their share turnover rate is below the market average. If the turnover rate is higher, however, the bourse and Financial Regulatory Authority (FRA) would have to sign off on the transaction beforehand.
The decision was made with the state’s privatization program in mind as it is expected to facilitate necessary restructuring at various state-owned companies set to offer stakes on the EGX soon, according to EGX boss Mohamed Farid. Removing restrictions on share splits will boost overall stock market activity by reducing share prices and making the market more accessible to all possible types of investors, Farid said, adding that it will also make it easier for companies to raise capital when they need to.