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Help understanding index criteria at euronext


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I am trying to understand which company will be selected to the portuguese main index (however my doubt likely aplies to most euronext indexes).

The rule book is attached: the selection criteria are in point 5. 


Since i am not a native english speaker, and I believe there is a problem in my understandig of the details I am asking for help here.


From what I undertand there are two excluding criteria:

1) free float must be over 15%

2) free float velocity must be over 25%


"Eligible companies are ranked based on the size in terms of free float adjusted market capitalization on the Review Cut-Off Date provided that they fulfil the velocity and free float requirements"


After that free float market cap is the ranking criteria, and should be above 100M.


I narrowed the problem down to 3 companies to one presently available place on the main index (which MUST be filled):

a) None of them fulfills the three criteria above

b) All of them fulfill the free float criteria.

c) The two smaller companies respect the free float velocity criteria

d) Due to its much higher market cap, the other company will be chosen if the free float velocity is over 25%


My main problem is in calculating free float velocity of the 3rd company. The problem is:

1) Last November shares outstanding increased from 20 million to 24 million.

2) If I use the 24 million shares the company is excluded (if I am calculating free float correctly)

3) If I use the 20 million shares up to November and the 24 million after that the company is not excluded


In a place they state:

"As a rule the number of shares that is taken for the selection is based on the number of shares listed on the Review Cut-Off Date."

But then:

"Velocity is calculated on a daily basis by dividing the number of shares traded by the number of shares listed, adjusted for free float. These daily figures are added up to calculate the annual velocity."


And there is also this (but I believe it is irrrelevant since it is about the quarterly reviews):

"At quarterly reviews, both the number of shares included in the index and the free float factor will be updated if the free float factor on the Review Cut-Off date deviates by 10% or more from the free float factor currently applied in the index (2 or more bands) and/or if the number of shares listed on the Review Cut-Off Date, deviates by more than 20% from the current number of shares included in the index."



Thank you for your help

(I can give you details of the companies if needed...)


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