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Companies which do not meet the minimum public shareholding norm of 25 per cent by June this year will face consequences, SEBI Chairman U. K. Sinha warned.
The deadline for Government companies, which must have a minimum public shareholding of 10 per cent, is August 2013.
Despite these norms being laid down three years ago, there are over a 100 companies that have not moved towards compliance.
In a wide-ranging interview with Business Line in the run up to the regulator’s silver jubilee function later this week, Sinha said that such companies are in violation of the listing guidelines, ICDR regulations, SEBI Act and other rules.
He said, “This can have serious repercussions. The consequences will follow.” That may dash hopes entertained by many that the deadline will be extended.
Likely penalty
While refusing to spell out the exact penalty that he would impose on such companies, he outlined the principles that SEBI would follow in handling this issue.
Firstly, non-compliance with the rule was not the fault of the minority shareholder.
It is the fault of the promoter and the management, which will face the consequences, he said.
Secondly, there will be some weightage given to genuine efforts taken by companies to meet the minimum public shareholding. For example, if some companies at 5 per cent public shareholding have come to 15 per cent, thereby showing intent to comply, then the quantum of penalty will be different, Sinha said.
Questioned about the delay in passing orders, Sinha acknowledged that the situation was far from ideal.
He conceded the existence of a long gap between the passing of interim and final orders in some cases and that he was not very happy with this.
He said that SEBI now believed that interim orders will be passed only in those cases where final orders are likely to be passed quickly.
Defending SEBI’s track record, Sinha disputed the contention that ‘big fish’ have got away in insider trading cases.
He said that orders had been passed against some of the biggest corporations and individuals engaged in such practices during the past six months.
> raghavendrarao@thehindu.co.in
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