The Majlis Research Center (MRC), the think tank of the parliament, has released the draft of a bill to reform the capital market law and called on experts to comment on its provisions.
The bill calls for amending some earlier articles and add 16 new ones, the MRC website reported.
One proposal obliges all listed companies and those affiliated to the government, non-government public institutions and pension funds to sell all their products via commodity exchanges, such as Iran Mercantile Exchange and the Iran Energy Exchange.
The goods can be traded through futures contracts, and to improve the derivatives market the regulator will grant tax benefits to companies operating in this market.
Similarly, the Ministry of Oil will be required to sell feedstock fuel to refineries and petrochemical plants through the IME and IRENEX on a regular basis.
The Central Securities Depository of Iran is obliged to pay shareholder dividend through a centralized platform. Dividend must be paid within three months after the annual general assembly of companies and penalties are envisioned for managers who fail to abide.
The Securities and Exchange Organization for long has been trying to create a legal framework obliging listed companies to pay dividends to shareholder accounts.
Long demanded by retail investors, the decision is expected to help them receive dividend without hassles.
Listed companies deposit dividend per share (DPS) to accounts in designated banks, asking shareholders to go to bank branches to receive the DPS within set timelines. In many cases, investors forsake the DPS to avoid going to the bank.
Respecting Public Opinion
The SEO will be mandated with developing mechanisms for receiving public views on violation of laws and misdoings in the capital market and reward whistleblowers.
To help protect investor rights, the SEO would be required to prepare specific guidelines to identify victims of capital market crime and adopt appropriate measures to compensate losses.
The proposals list routine activities of the capital market and ask the regulator to move them online within six months after the bill becomes law to cut the bloated bureaucracy and expedite procedures through online platforms.
The bill proposes tax holidays for companies that are listed in the stock market. Tax cuts would be 10% of the total income of listed companies.
This incentive would double for listed companies that hold at least 20% of their stake in free floating stocks. Floating stock represents the total number of outstanding shares that are open to public for investment. The number reflects public interest or investor interest to invest in a company.
High-float stocks are better known for the stable movement that is seen in their price. This stability helps to reduce risk and produce long-term gain.
*** Project Funding
Under the new rules, government-controlled listed companies will be allowed to set up project funds at the national level. As the name suggests, the funds are designed to pool financial resources for financing government projects.
Proposals further stipulate that the government be allowed only in-kind contribution and not contribute in cash. The in-kind contribution includes providing machinery, giving permits and the like. Projects funds should acquire financial resources via share subscriptions in the capital market.
Furthermore, the government cannot hold more than 20% of the shares in a project fund and is obliged to divest at least 25% of the its shares in “big national projects” through funding within six months of the new laws.
Proposed reforms call on the Ministry of Science and the Ministry of Education to improve “economic and financial literacy” by adding the relevant subjects and courses in curriculums.
