The Securities and Exchange Organization (SEO) has imposed new restrictions to discourage giant listed companies from offering large-scale share offers.
SEO has approved a decision based on which big holding companies cannot pay dividends over and above 20%of their income from share sales, the Securities and Exchange News Agency reported.
it said the big companies must transfer the rest of the income to their “reserve accounts” for future needs, namely for raising capital.
Market observers say the move is expected to affect the approach of major companies vis-à-vis the way they meet thier expenses via the share market.
“As the result of this decision, these companies will no longer be able to sell shares to pay their bills,” Payman Hadadi, an advisor to the SEOs chief said on Twitter, noting that big listed companies have (in the past) offered unusually “large amounts of shares and disrupted the market.”
This statement is an implicit reference to two years ago when major shareholders of big companies rushed to the sell side as the stock market reached its apex in August 2020.
After historic gains in the first few months of fiscal 2020-21, the bubble burst and Tehran’s share market went into a tailspin in mid-August -- a bearish trend that has continued to this day. At that time, the benchmark of Tehran Stock Exchange, TEDPIX, grew close to 300% before diving deep into the red.
Market observers blamed major shareholders and institutional traders for the unprecedented selloff that sank most markets indictors. They increased offers when share prices reached record highs and let the prices plunge by refusing to inject a portion of their earnings from selling shares into the market.
The prolonged downturn and instability in the stock market has drawn the ire of millions of retail investors who were encouraged to join the stock market by those at the highest echelons of power.
They put their hard-earned savings into the bourse only to suffer big and apparently permanent hits as share prices crashed and devastated livelihoods.
However, moves to restrict big listed companies is not new. Stock market authorities in the past have tried but failed to minimize the impact of big shareholders on stock trade.
