What is the “Free Float” of SGX Stocks?

Free Float

 

SGX Observer saw this article by The Business Times – “Olam’s free float back above 10% mark” published on Apr 02, 2018 – 9.27pm. (here)

Wondering since when Olam’s free float fall below 10%, SGX Observer visited SGX website and found the announcement made by Olam on 02 Apr 2018 7:23pm (here), then realised Olam has made an announcement on 17 Nov 2017 (here) that

As required under Rule 724 of the Listing Manual of the SGX-ST, the Company wishes to announce that, as a result of the Relevant Share Issuance, the percentage of Shares1 held in public2 hands has fallen below 10%, to approximately 9.31%.

However,

… there is an aggregate of 59,209,978 outstanding Warrants which remain exercisable up to 5.00 p.m. on 29 January 2018…. Assuming all of the outstanding Warrants are validly exercised and the number of Shares held by members of the public otherwise remains constant, this will cause the percentage of Shares held in public hands to increase back to above 10% before or around the Relevant Date.

Note:

1 “Shares” excluding treasury shares, preference shares and convertible equity securities.
2 “public” as defined in the Listing Manual of the SGX-ST refers to persons other than (a) directors, chief executive officer, substantial shareholders, or controlling shareholders of the Company or its subsidiaries, and (b) associates of the foregoing persons in (a).

 

Then on 29-Jan-2018, Olam announced that…

… the number of issued ordinary shares of the Company has increased from 3,268,891,303 to 3,271,018,657 ordinary shares (including 99,533,600 treasury shares) following the allotment and issuance of new ordinary shares from the exercise of 2,127,354 Warrants at the exercise price of US$1.09 each on 29 January 2018. 

… but didn’t mention anything with regards to free float %.

 

According to the FY2017 financial statements published on 27-Feb-2018 (end of period 31-Dec-2017), Total no. of shares outstanding as at the end of period net of treasury shares = 3,121,511,310.

 

… and until 02-Apr then Olam shared that

the free float has today been restored to 10.27% following the vesting and release of Shares under certain subsisting restricted share awards and performance share awards (collectively, the “Share Awards”) granted under the Olam Share Grant Plan, thereby satisfying the requirement under Rule 723 of the Listing Manual.

 

So…. it actually took 4.5 months for Olam to bring the free float % back to above 10%.

 

 

SGX Listing Manual

 

According to SGX Listing Manual:

Under Rule 724 of the Listing Manual, when the percentage of Shares held in public hands falls below 10%, the SGX-ST may suspend trading in the Shares. The SGX-ST may allow the Company a period of 3 months or longer to restore its public float to at least 10%, and in the event that the Company is unable to do so within such period, the SGX-ST may remove the Company from the Official List.

After reading the statement 3 times, SGX Observer then realised it uses the phrase – “may suspend” and guess it gives the flexibility of “may not suspend” too, while SGX Observer could have wrongly perceived it as “less than 10% then must/should be suspended”.  🤔

 

By the way, the latest amendment to the rule effective from 25-Sep-2015 was –

The issuer may be delisted removed from the Official List if it fails to restore the percentage of securities in public hands to at least 10% after the period.

… and SGX Observer guess it is too complicated for a layman to be able to tell the difference between ‘delisted’ and ‘removed from official list’ and if there is an ‘unofficial list’. 🙄

 

 

SGX StockFacts

 

SGX Observer thought the best place to do fact checks about SGX stocks would be “SGX StockFacts”. However, according to SGX StockFacts, free float of Olam is 16.3%!!

(yes, SGX Observer checked on 2-Apr, and then verified again today, and it is still 16.3%).

Olam StockFacts 02-Apr-2018
Olam StockFacts 02-Apr-2018
Olam SGX StockFacts 05-Apr-2018
Olam SGX StockFacts 05-Apr-2018

 

Probably this “Float” is not the same as the “free float” defined earlier, therefore it has never reflected the “free float of less than 10%” according to Olam’s announcements since 17-Nov-2017? But, what is the definition of this ‘float’ then? 🤨

 

 

SGX Companies with less than 10% Free Float

 

The “fact” is that there are 30 companies with “Free Float” less than 10% as flagged by SGX StockFacts, as at 6-Apr-2018, including some familiar names such as Unusual Limited, Great Eastern Holdings Limited, Starland Holdings Limited, Perennial Real Estate Holdings Limited, etc.  Are these “free float” numbers correct? Or are these companies are indeed in the list of “may be suspended” but not suspended due to certain reasons? 😯

 

StockFacts Free Float Less Than 10% (06-Apr-2018)
StockFacts Free Float Less Than 10% (06-Apr-2018)

 

 

Fact or Falsehood?

 

SGX Observer don’t think this is “Deliberately Online Falsehoods”. It could be “fact” but outdated, or “fact” with definition not shared, etc. 🤫

Do you really know what is the true definition of “Free Float”? 🤯

If SGX StockFacts is not the place that published the most updated facts, then where else can we check the facts of SGX stocks? 😶

 

 

 

 

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Disclaimer: SGX Observer is just a layman investor and not professional accountant or analyst or financial guru. The interpretation is purely from personal point of view, and the interpretation could be wrong. Appreciate your kindness to point out any incorrect concept or mistakes you spotted.

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