Definition of free float

The free float of a company is the portion of its shares that can be publicly traded. In order to be listed on certain stock exchanges, companies have to satisfy particular free float requirements set down by the exchange. These requirements can include a certain number of shares worth a certain amount and/or that the shares should represent a particular percentage of the total number of shares issued in the company. The concern is that investors in companies with a smaller free float are at risk because it will mean they can exercise little control over the company.

 

free float in the news

In October 2012, there were concerns in the UK that there could be a relaxation of rules for companies which list on the London Stock Exchange. The UK government was proposing that requirements insisting on a 25 per cent free float be reduced to as little as 10 per cent for fast-growing technology companies.

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