The Confederation of Indian Industry (CII) has asked SEBI to postpone the 25 per cent minimum public shareholding norm in companies to 2015. The existing deadline is June 2013.
CII also said that a further flexibility in the manner of implementation was required for companies to comply.
It observed that the average fund raising in the last five years on Indian bourses was Rs 30,000 crore. This was less than the Rs34,860 crore required by 162 companies to comply with the norms by June, 2013. It also pointed out that the alternative methods — institutional placement programme and offer-for-sale through stock exchanges — to increase public shareholding were yet to stabilise.
The confederation has proposed a set of measures to implement the minimum public shareholding norm of 25 per cent.
Hormonising margin
In the offer-for-sale through secondary sales, CII has asked for removal of the mandatory 12-week gap between two OFS transactions.
It has also asked for harmonising upfront margin requirements with existing secondary market transactions.
CII has asked for doing away with the minimum size of OFS (higher of one per cent of paid-up capital and Rs 25 crore as on the specified date).
The requirement of 10 per cent or such lesser percentage so that the minimum norm of 25 per cent is achieved should also be removed, it said.
The confederation has also asked SEBI to consider market cap on a real-time basis instead of a specified date as companies have to wait for one more quarter to take advantage of the limit.
To curb price volatility, CII has asked for a trading notice of T-minus-one (t -1) instead of t -2 for pricing the OFS issue.
In the case of institutional placement programme, it asked for relaxation in disclosure requirements; increase in extent of sell-down from the existing 10 per cent and clarity on investor groups, especially, FIIs and their sub-accounts which overlap in terms of their fund manager or beneficial ownership.
The confederation also asked for secondary sales by promoters and qualified institutional placements as other options.
Use of share swaps in mergers and acquisitions to public shareholders; stock options for employees and depository receipts held by the public should also be considered while calculating minimum public shareholding said CII.