Sponsor directors of Walton Hi-Tech Industries PLC have transferred nearly 29.7 percent of their shares to non-director family members, most of it as gifts, based on a regulatory instruction, according to a BRAC EPL Stock Brokerage report yesterday.

When the Bangladeshi electronics and technology product manufacturer and exporter went for its initial public offering (IPO) in 2020, it had made less than 1 percent of its shares available to the general public.

Afterwards, the Bangladesh Securities and Exchange Commission (BSEC) had instructed the company to offload more shares.

Sponsors and directors of the company started to sell their shares from the end of 2023.

They also gifted shares to their family members who were not directors. Though the shares were tradeable, the family members retained those, for which no volatility was created in the market.

In other words, through such share sales and giftings, the company increased free float, meaning the number of shares available for trade by the public.

At present, sponsor and directors hold 74.07 percent of the company's shares, institutional investors 0.52 percent, foreigners 0.09 percent and public 25.32 percent, according to the Dhaka Stock Exchange.

On the other hand, the offloading will enable the company to avail an income tax reduction of 2.5 percent.

According to regulations of the National Board of Revenue, any company having a free float of at least 10 percent will enjoy an income tax rate of 22.5 percent instead of the usual 25 percent.

Moreover, for fiscal year 2023-24, the company announced a 350 percent cash dividend for general shareholders and a 200 percent cash dividend for directors and sponsors.

Though the offloading will result in the company paying an additional Tk 111 crore in dividends, the money will essentially end up going back to the family.

Shares of the A category company rose 2 percent to Tk 494 at the Dhaka Stock Exchange yesterday.