QFMA gives listed companies June 9-July 7 window to enforce stock split
April 08 2019 08:02 PM

The listed companies are required to enforce stock split, through which the nominal value of a share will become QR1 instead of the present QR10, from June 9 until July 7, according to the Qatar Financial Market Authority (QFMA).

The QFMA confirmed that a detailed schedule of the stock split date of each of the listed companies, subject to stock splitting, shall be published later on the websites of the Qatar Stock Exchange (QSE) and the Qatar Central Securities Depositary (QCSD).

The financial market regulator stated that the decision of the stock split shall be enforced during the period of June 9 to July 7, 2019, in a scheduled manner in co-ordination with the QSE, the QCSD and other parties concerned. The same decision shall apply to investment funds’ units listed on the QSE.

The stock split will result in enhanced free float, thereby increasing liquidity, leaving the paid-up capital intact. Shareholders do not need to take any action because of the stock split, which will not affect the company’s market capitalisation, or the proportionate ownership of existing shareholders.

The QSE-listed companies held extraordinary meetings of their general assemblies, in parallel with their ordinary annual meetings, in order to amend their articles of association in preparation for the stock split.

The QFMA, in co-ordination with the QSE, the QCSD and the financial services companies, has held several workshops and meetings to equip the existing systems and rules with the required amendments through task forces formed to coordinate and prepare for the splitting process.

In addition, the QFMA also organised a workshop last October on stock split, at the end of the Second Corporate Governance Conference, and invited listed companies and all related parties to enhance awareness about the stock split processes.

The move (to effect stock split) is expected not only to attract small investors in a big way, thereby increasing the liquidity of the stock, but also prompt international and large investors to invest more in its equity, thereby improving the price and valuation of the stock further.

The Article 152 of the new Commercial Companies Act No 11 of 2015 allowed the nominal value of the share to be between QR1and QR100.

The empirical studies in corporate finance indicate that the stock split is positive and indicates positive future performance, market sources said.

"The stock split will gauge the right intrinsic value as more float will help market forces to determine true price," an analyst with a leading investment firm said.

The move by the QFMA to allow stock split also comes in the wake of two exchange traded funds (sponsored by Doha Bank and Masraf Al Rayan), which have been well received by the investors.

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