Trade in Justice Shares Revised Upwards

EghtesadOnline: The government has announced that holders of the so-called “Justice Shares” can henceforth trade 60% of their shares. Initially, in May it had allowed tradability of only 30%.

News ID: ۷۵۰۶۵۷

10 August 2020

Justice Shares are shares of government-owned companies that were given free to the six lowest income deciles almost fifteen years ago. Shareholders were not allowed to sell the shares until last May.

According to Mohammad Javad Farahanian, the plan and development deputy at the Central Securities Depository of Iran, 60% of shares are now tradable.

To avoid hurting share prices due to oversupply, the government decided to allow the tradability of shares in phases. After removing the trade ban on 30% of shares, President Hassan Rouhani in July announced a timeframe to fully remove restrictions on trading Justice Shares on two religious and national occasions.

Based on the new framework, people can trade their remaining shares by Feb 11, the occasion marking the anniversary of the 1979 Islamic Revolution.

In late April, the Leader of Islamic Revolution Ayatollah Seyyed Ali Khamenei approved a government request calling for the transfer of ownership of shares to the people and remove the restrictions on trading Justice Shares in the stock market.

The initiative is seen by observers as a positive move at a time when the low-income strata is facing unusually tough economic times as the coronavirus pandemic continues to hammer the economy, businesses and livelihoods.

The whole portfolio of Justice Shares is now reportedly worth close 190 million rials ($860), up approximately threefold since the shares first become tradeable in April, thanks to remarkable gains in the share market.

Justice Share portfolio includes 49 state-owned companies in the auto, metal, mining, and agriculture, petrochemical and banking sectors. A total of 35 companies are already listed with the stock market and another 14 are planning IPOs.

To encourage shareholders to keep their shares and discourage them from rushing to sell their assets, banks have announced readiness to issue credit cards for owners using the shares as collateral.

Shareholders will be eligible for credit up to 50% of the value of their Justice Shares, according to Abbas Memarnejad, the deputy economy minister for banking, insurance and state-owned companies' affairs.