The government’s decision to enforce a minimum 25% public holding in all listed companies should be put on hold for another three months, said Hari S Bhartia, president of Confederation of Indian Industry (CII). He said there are a lot of grey areas that need to be cleared first.
According to the new rules, listed companies will have to increase their public participation to at least 25%. The companies can achieve this over three years but will have to offload at least 5% per annum. Mr Bhartia said in the long run the new norms will help the government in its disinvestment process, but in the short-to-medium term, there would be crowding out of resources.
“Too many public offers will chase the same money,” he said. Another area requiring clarity is treatment of private equity investment, he noted.