Finance ministry is likely to prescribe the minimum 25 per cent public holding for listed companies next month. Official sources told PTI that a notification to this effect is likely to be issued next month by the ministry.While all future public issues will have to abide by 25 per cent criteria, the existing listed companies may be asked to follow the rules in stages.

However, big public issues may be exempted from the minimum 25 per cent public holding criteria as the market may not have appetite for such big issues, official sources said, but refused to divulge what would constitute the big public issues.

There will not be any distinction between private and public sector companies or between sectors for following the minimum public holding criteria, the sources said.

The finance ministry had came out with a draft proposal in 2008 in this regard, while Finance Minister Pranab Mukherjee, in his Budget speech last year, said that equity holding of non-promoter or public shareholders in all listed entities, whether from public or private sector, needs to be raised.

There are a number of public sector companies in which public holding is below 25 per cent, while in some cases the public holding is only in single digit. For example, non-government holding in MMTC is less than one per cent.

The existing rules, which are in place since 2006, also mandate a minimum 25 per cent public shareholding for the listed companies, but there exist many exemptions. Till 1993, regulations required a minimum 60 per cent public holding, but there were relaxations.

In 1993, the threshold was lowered to 25 per cent and further cut to 10 per cent in 2001, before being raised to 25 per cent in 2006. But all along, there have been flexibilities in the regulations allowing companies to have promoter holding of up to 90 per cent in most cases.

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  1. Tira.T says:

    Quite right, Mr. Pabari is. But, whatever way it is, let their be some degree od stability for a given number of years and let the Govt. and its most un-professional bureaucrats(but most certainly always with ulterior motives) not take the huge mass of ordinary and small (prospective as well as existing )share-stake-holders for granted for all the years to come. This is an advice since these high-stake civil service players must also retire one day and nobody can indeed predict that is in the womb of the future-even for the most powerful person of the moment.

  2. CA Rajesh Pabari says:

    Don’t you think that asking 25 % public shareholding is too much.

    I think it is practically a daunting task to achieve the same. It may create a havoc in the market.

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September 2021