QFMA to Enforce Stock Split Decision on June 9

Doha, April 08 (QNA) - Qatar Financial Markets Authority (QFMA) announced that the enforcement date of the decision of stock split of the companies listed at Qatar Stock Exchange (QSE) is on 9th June 2019, so that the nominal value of a share in all listed companies shall become QR 1 per share. The same decision shall apply to investment funds' units listed in QSE. QFMA stated that the decision of the stock split shall be enforced during the period of 9 June to 7 July 2019, in a scheduled manner in coordination with QSE, Qatar Central Securities Depository (QCSD) and other concerned parties. QFMA confirmed that a detailed schedule of the stock split date of the listed companies subject to stock splitting shall be published later on the websites of the QSE and QCSD. 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 decision's enforcement. QFMA, in coordination with QSE, QCSD and the financial services companies, has held several workshops and coordination meetings to equip the existing systems and rules with the required through task forces formed to coordinate and prepare for the splitting process. In addition, QFMA organized last October a workshop on the 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. QFMA provided clarifications on the stock split, noting that the share split is an increase in the number of shares of the company to a larger number of shares with a nominal valueless, without any impact or change in shareholders' equity, which does not affect the total market value of the client's portfolio. QFMA explained that if the total number of shares of the pre-retail company is 20 shares, with the value of QR 10, the total value of shares in the stock market will be QR 200, after the split the number of shares will be 200 shares, with the value of one share, with a stock value of QR 200. QFMA said there are direct targets of the stock split which includes reducing the share price, increasing the number of shares available for trading, increasing share trading rates and expanding the ownership base of listed companies as a result of the increase in the number of shareholders, as a segment of investors prefer to deal with low-priced stocks, as well as increasing demand for corporate shares by increasing the number of investors and entering a new segment of small investors to the market. QFMA added that the general objectives of the stock split include increasing the prospects of investing in the financial market and expanding the base of shareholders, attracting more small investors and expanding the opportunities for choice in front of dealers in QSE. It added that stock split will increase the liquidity and turnover of shares on listed companies, increasing the demand for the shares of companies in general, raising the level of daily activity of the stock exchange transactions and increasing the number of transactions executed on the shares of companies. QFMA said that the importance of stock splitting increases when share prices double overtime and reach high levels, which may prevent them from being made available to all segments of investors and customers, thus making it indivisible to be limited to a certain class of high-net-worth individuals or large financial capabilities, which may affect the normal trading of the stock. QFMA said that the stock split would increase the number of shares available for trading by 10 times to companies, which nominal value is QR 10. The market value of the listed companies is stable and will not be affected by the stock splitting process but remains naturally affected by the daily trading activity. On the possibility of the impact of the stock split on the ownership of investors in various companies, QFMA confirmed that there would be no impact at all, adding that the stock split will double the share of investors by 10 times, explaining if a person owns 100 shares in a certain company that is trading at QR 10 per share, the total value of these shares is QR 1,000, following the stock split, the number of shares owned become immediately 1000 shares with the total value of these shares remaining QR 1,000. Moreover, QFMA stressed that the profits distributed by companies to shareholders will not be affected by the stock split, because the increase in the number of shares owned by the investor, as a result of the stock split of the nominal value of the share does not affect the total cash dividends distributed. QFMA noted that the profits distributed by companies annually to their shareholders are distributed proportionately, as if the company distributes QR 10 per 50 shares before the stock split, it means after the stock split operation distribution of QR 1 for every five shares, which makes the value of distributions is the same in each case, so the splitting of the nominal value of the shares will not affect the cash dividends for the shareholders. Regarding whether there are certain effects of the stock split on the earnings per share and the general index of the stock exchange, QFMA said earnings per share will decline as a result of the increase in the number of shares, but the value of net profits will be the same in the final result, either before or after the stock splitting. QFMA stressed that the stock split process has no impact on the stock index as it does not affect the movement of stock prices and changes in the trading room of the stock exchange. It explained that the index is only a mirror of the interaction of the forces of supply and demand and the daily activity of trades and operations carried out on the shares of sale and purchase. Furthermore, QFMA stated that the paid-up capital of companies is not affected by stock split, while the book value per share decreases due to the increase in the number of shares resulting from the stock split, with total shareholders' equity remaining unchanged, calculated by dividing the total shareholders' equity by the number of shares resulting from the stock split. On the implications of the overall stock split, QFMA said that the stock split decision will not affect in any way the value of the investor's shares, nor his obligations towards the company that invests in its shares, but the only direct impact on the investor is to increase the number of shares owned by him, while the total market value remained unchanged. QFMA noted that the stock split would have no impact on the company's equity, which includes paid-up capital, reserves, and retained earnings, therefore the equity remains as it is before and after the stock split. (QNA)