‘India Inc must comply with 25% minimum public shareholding norms by June’

K. Raghu Rao Sneha Padiyath Mumbai | Updated on November 20, 2017 Published on October 12, 2012

SEBI Chairman U.K. Sinha said that India Inc has no choice but to comply with minimum public shareholding norms of 25 per cent by June 2013.

“Minimum public shareholding is not unique to India. If companies think they can get away with violating this norm, let me tell you the consequences will be very serious,” said Sinha, speaking at FICCI’s capital market conference on Friday.

He observed that SEBI had provided the industry with enough avenues to comply with minimum public shareholding.

“We introduced the institutional placement programme (IPP) and the offer-for–sale (OFS) route. We also allowed the rights and bonus issue routes to achieve minimum public shareholding. And we clarified that ADRs and GDRs will not be considered in the numerator and the denominator. But hardly two or three companies have used OFS,” said Sinha.

He observed that the industry was hoping that this deadline would be extended. “I have serious complaint on this attitude,” he said.

He added that all non-compliant PSUs will become compliant with this norm within the timeline.

FII inflows

To attract FII money, the industry had to improve its corporate governance practices on a long-term and sustained basis, Sinha said.

On SEBI’s role, he observed that the regulator was there to play the role of a cautious policeman by educating on how to follow rules and not the one who waits for the crime to be committed and then books the offender.


Sinha said that SEBI would consider de-listing as an option for companies with genuine difficulties in achieving minimum public shareholding. But this he said would be only on a case-to case basis.

“I am also pained to mention here that while on the one hand, the point made a short while ago is valid that if there are some genuine difficulties those should be looked at very seriously. I take this point but I was shocked and I am sure some of you will be shocked when a proper representation was made to the Government and it came to us from the Government that India was in dire need, our capital account is not in good shape and if we want, we can get $40 billion in the next six months by encouraging all the multi-national companies to get de-listed. Have a heart, we are not so desperate. My job is to get companies listed and ensure increased retail participation. Allowing wholesale de-listing of companies is not a solution to India’s problems,” he said.

On pensions, Sinha said that certain laws had to be amended for pensions to take off. “We should identify areas where we can make improvements without going to the parliament,” he said.

Offer document

On framework for rejection of offer documents Sinha said that corporates where all the information was available should get a chance to access the capital market. This framework was a transparent way to reject the offer document and ensure nothing was suppressed, he added.

He said that SEBI was committed to protect the interest of minority shareholders.

“But I would like to remind, consequences of non-compliance of the listing agreement or any rule can be rather severe. It is perhaps good for them to start working towards enforcing those guidelines.”


Published on October 12, 2012
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