U.K. Sinha, Chairman,Securities and Exchange Board of India, on Tuesday, came down heavily on listed private companies which had not initiated steps to increase public shareholding.
In late 2010, SEBI had come out with norms asking private companies to maintain a minimum shareholding of 25 per cent and had given a deadline of June 2013 to make themselves compliant with the norms.
According to Sinha, there were 200 such private companies, which were non-compliant. However, nearly 112 companies have initiated steps to increase their public shareholding to the mandated levels.
While trading has been suspended for 37 out of those 200 companies, nearly 51 companies have not initiated any measure to comply with the norms, he said.
Not a threat
“I do not want to issue a threat to them in this meeting but I have made it very clear that those who will not follow SEBI guidelines for minimum public shareholding will suffer the consequences. And those consequences are not very difficult to assume,” he said at an interactive session organised by the Confederation of Indian Industry.
There has been a decline in companies’ inclination to raise capital from the market over the past few years, SEBI chairman said.
The amount has dropped from Rs 67,000 crore in 2010-11 to Rs 14,400 crore this year. The amount raised in 2011-12 stood at Rs 16,000 crore.
“This is a big decline. Some corporates have withdrawn even after filing papers with SEBI and in the past year Rs 60,000 crore of financing has been shelved,” he said.
The decline in raising capital from the market was more striking in India as compared with other BRICS (Brazil, Russia, India, China and South Africa) countries, he pointed out.
This has prompted the regulator to take several steps including reducing the threshold limit for fast-track fund raising from Rs 5,000 crore to Rs 3,000 crore, he added.
This apart, SEBI has also introduced the e-IPO facility to encourage companies to raise funds from the capital markets. “This facility has been introduced in 400 locations so far. We are planning to expand it to 1,000 locations soon,” he said.
shobha.roy@thehindu.co.in