Listed Public Sector Companies to get one year to achieve minimum public shareholding norm

Shishir Sinha New Delhi | Updated on August 01, 2020 Published on August 01, 2020

Out of 45 PSEs, some have yet to achieve minimum public shareholding of 25 per cent

The Finance Ministry has notified changes in the norm. A rule notified in 2018 had mandated every listed public sector company, which has public shareholding below 25 per cent, to increase its public shareholding to at least twenty-five per cent, within a period of two years from the date of that notification (August 3, 2018). It means the period is coming to end this month. Since many of PSUs are yet to achieve a minimum public shareholding target and considering the pandemic situation, it has been decided to give more time to achieve the target.

As on date there are 45 Central Public Sector Enterprises listed on Bombay Stock Exchange, out of which, some of them which have yet to achieve minimum public shareholding. Hindustan Copper has Government’s shareholding of 76.05 per cent while MMTC has 89.93 per cent, SJVN has 86.77 per cent, NLC India has 79.20 per cent and ITDC has 87.03 per cent. This means these companies need to lower Government’s holding to at least 75 per cent and to increase minimum public shareholding to at least 25 per cent.

Public means persons other than – (i) the promoter and promoter group; (ii) subsidiaries and associates of the company. Public shareholders could be individual or financial institutions and they normally buy shares through public offer or secondary markets. In order to bring more transparency in the working of listed companies, the concept of minimum public shareholding has been introduced.

More time for maintaining minimum public shareholding is the second major relief on compliance front for the listed companies during a pandemic. Earlier on May 14, SEBI relaxed applicability of action against not maintaining the shareholding norm. According to the regulator, after taking into consideration requests received from listed entities and industry bodies as well as considering the prevailing business and market conditions, it has been decided to grant relaxation from the applicability of the October 10, 2017 circular.

This means the stipulation mentioned in the circular relaxed for listed entities for whom the deadline to comply with minimum public shareholding requirements falls between the period from March 1, 2020 to August 31, 2020. “Recognized Stock Exchanges are advised not to take any penal action as envisaged in the October 10, 2017 circular against such entities in case of non-compliance during the said period. Penal actions, if any, initiated by Stock Exchanges from March 1, 2020 till date for non-compliance of MPS requirements by such listed entities may be withdrawn. 3. This Circular shall come into force with immediate effect,” the regulator had said.

As per the norms, exchanges can impose a fine of up to Rs 10,000 on companies for each day of non-compliance with MPS requirements. Besides, exchanges can intimate depositories to freeze the entire shareholding of the promoter and promoter group.


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Published on August 01, 2020
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