Listed companies are unlikely to get relief from norm and deadline of minimum public shareholdings. This was indicated by the Finance Minister P. Chidambaram on Tuesday.
Listed entities (companies whose shares being traded on stock exchanges) have been grouped into two categories for minimum public shareholdings. According to the Securities and Exchange Board of India norms, all private listed companies have been given a deadline of June 30, to achieve minimum 25 per cent public shareholdings.
Similarly, all Government-owned listed companies must have 10 per cent public shareholdings by August 30. Public shareholding means shares allotted to individuals and institutions other than promoters.
“Companies have been given enough time. Deadline was extended more than once. So there should be every effort to comply,” Chidambaram told reporters when asked about possibility of another extension. He also clarified that it is up to SEBI to relax.
SEBI, on various occasions, has reiterated that India Inc has no choice but to comply with minimum public shareholding norms of 25 per cent by June 30.
In late 2010, the regulator came out with norms asking private companies to maintain a minimum shareholding of 25 per cent and had given a deadline of June to make themselves compliant with the norms.
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.
Just last month SEBI Chief U.K. Sinha had said, “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.”
SEBI feels that enough avenues to comply with minimum public shareholding. These include institutional placement programme, offer-for — sale route, rights and bonus issue routes to achieve minimum public shareholding.