Tehran Stock Exchange New Rules Take Effect

EghtesadOnline: Changes to existing stock exchange regulations will come into effect today (December 1), said Mohsen Khodabakhsh, deputy for supervision on exchange at the Securities and Exchange Organization.

News ID: ۷۸۴۳۶۲

01 December 2018

The measures are taken, among other things, to increase the market liquidity, smoother trading in the stock market and prevent a blockage of brokers' funds, he said.

Tehran Stock Exchange and Iran Fara Bourse – an over-the-counter market for securities and other financial instruments in Tehran - announced the changes in stock market trading earlier in the week.

The latest adjustments concern shortening the period that a share is suspended due to fluctuations from one day to one hour. This means that following a stock's 20% fluctuation for four consecutive business days, its ticker symbol will be halted for an hour, according to Financil Tribune.

"In the new framework, public clarification about 20% fluctuation is optional and companies are not obliged to do so", said Khodabakhsh. He elaborated that if a company clarifies the reasons for its share fluctuations during this one-hour period, its details will be published or else a stop will be imposed merely for shareholders' notice about any company's symbol and should serve as a warning to them.

He also communicated the details about 50% fluctuation of shares, saying that fluctuations in this range are treated based on the previous procedures and new changes do not apply to it.

Corporate Governance Update

Earlier this month the SEO announced a modified version of corporate governance regulations and their notification to issuers in TSE and IFB. The rules require listed and registered companies to modify their articles of association accordingly, for which the SEO will soon provide a proper template.

As per the changes, by the next fiscal (starts March 20, 2019), a majority of board members of listed companies will be non-executive and the number of independent members will not be less than 20% of the whole board.

The board members will be required to put up collateral equal to 0.1% of the company’s share value or a minimum of 5 billion rials ($) as qualification shares. The figures shall be adjusted every other year based on the inflation rate and consumer price index.

Regulations also stipulate that executive board members of a company cannot join another company as CEO or non-executive board member.