There are close to 30 listed PSUs where public investors hold less than 25 percent stake, while the existing norms require a minimum public holding of only 10 percent for them. (Agencies)
The Securities and Exchange Board of India (Sebi), which regulates all listed companies, has suggested to the Finance
Ministry an increase in minimum public shareholding in listed Public Sector Undertakings (PSUs) as part of its efforts to deepen the markets and increase public float, official sources said.
However, a final decision in this regard can be taken only after getting the views of new Finance Minister Arun Jaitley, who took charge of his office on Tuesday.
The major PSUs where government holding currently stands at more than 75 percent include Coal India, SAIL, MMTC, NHPC, NMDC and SJVN.
The market watchdog is of the view that the PSUs can be given a three-year time period for meeting the new limits, sources said, while adding that the move would also help in promoting wider participation from investors and boost government's plan of raising funds through disinvestment.
A similar time frame was given to private sector companies in 2010 to achieve minimum 25 percent public holding, while PSUs were also given three years in the same year to increase their public shareholding to at least 10 percent.
The deadline for 25 percent minimum public shareholding requirement for private companies ended in June 2013, while the same for the government to reduce its stake to at least 90 percent in PSUs was August 2013. When the norms were proposed in 2010, more than 200 companies needed to comply.
Incidentally, Sebi had first proposed in June 2010 that all listed companies -- including PSUs -- would need to have a minimum public shareholding of 25 percent. However, in August 2010, the norms were amended to revise public sector companies' minimum public shareholding norms to 10 percent (from 25 percent) within three years.
Sebi had taken action against 105 private companies, their promoters and directors for failing to achieve the 25 percent public float within the stipulated period.
These directions issued by Sebi against these firms included freezing of voting rights and corporate benefits such as dividend, rights, bonus shares and split of the promoters or promoter group of the non-compliant companies with respect to the excess of proportionate shareholding in respective companies.
Almost all PSUs had managed to meet the guideline before the end of the August deadline. However, the regulator had allowed the government to transfer its holding in excess of 90 percent in sick PSUs to Special National Investment Fund.
There are close to 30 listed PSUs where public investors hold less than 25 percent stake, while the existing norms require a minimum public holding of only 10 percent for them.