Free float is the portion of a company’s total shares outstanding that’s actually available for public trading, excluding shares held by founders, controlling shareholders, or other strategic holders who aren’t regularly buying or selling.
For example, a company with 500 million shares outstanding, of which 200 million are held by the founding family and not actively traded, has a free float of 300 million shares, or 60% of the total.
Free float matters for liquidity — a lower free float generally means fewer shares changing hands day to day, which can widen bid-ask spreads and increase price volatility on comparatively small trades. Bursa Malaysia and most major indices also weight constituents by free float rather than total market cap, so it affects how heavily a stock is represented in index-tracking funds.