The shareholding pattern of companies listed on National Stock Exchange (NSE) as on June 30, 2001, reveals that 34 per cent of all companies have non-promoter holdings of at least 60 per cent, while the listing criteria of a 10 per cent public float, Rs 100 crore public float in value terms, and 20 lakh shares are met by around 24 per cent of all the companies listed.
Under the amended guidelines listed companies should maintain at least 10 per cent of their issued and paid-up capital as public float.
This is subject to the condition that minimum 20 lakh securities is offered to the public and the minimum size of the offer is Rs 100 crore.
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In the event that all the above conditions are not met then the company has to ensure that at least 25 per cent of each class of securities is offered to the public for subscription.
In order to ensure compliance - with the continuous listing conditions where the public float cannot go down beyond the minimum specified floor - companies have to disclose their non-promoter holding to the non-promoter exchanges on a half-yearly basis.
According to the National Stock Exchange, which has made the study, if the first criterion for listing is maintained then "one-fourth of the companies listed on NSE and one tenth of companies listed on other exchanges would not continue to be listed."
In fact according to NSE authorities since the second criterion for listing is more stringent it is "unlikely that the companies would follow this route for listing of their companies when the alternative route of 25 per cent is available."
Based on the data it has made the observation that "most companies satisfy the requirement of listing in percentage terms, while most of them fail in terms of public float of Rs 100 crore."
Further, "if non-promoters must have at least 10 per cent of securities which must be valued at Rs 100 crore, the company should have a market cap of at least Rs 1000 crore."
Interestingly those with the highest public float (at least 60 per cent) are companies of the petrochemicals sector (50 per cent) followed by the finance sector (46.15%), and then pharma (38.71%). Only 33.33 per cent of the companies in the FMCG sector (dominated by multinationals) have non-promoter holdings of 60 per cent.
However when it comes to a lower non-promoter holding of 40 per cent the IT sector scores with more than 90 per cent of the companies qualifying for the limit. Petrochemicals come second with 80 per cent and manufacturing with 76 per cent.
FMCG is still relatively low with only 58 companies coming into this category. However all companies in the FMCG, IT, media sectors have non-promoter holdings levels of at least 25 per cent. All companies barring around 1.5 per cent of the companies in the manufacturing sector meet the 10 per cent criterion.
On an across-the-board framework, non-promoters hold: more than 40 per cent in 71 per cent of all companies, more than 25 per cent in 93 per cent of all companies while more than 10 per cent is held in nearly all companies.
Only 25 per cent all listed companies meet the Rs 100 crore capitalisation. Fifty-five per cent of the companies in the petrochemicals sector fulfill the stringent listing criteria of minimum 10 per cent float, 20 lakh securities and Rs 100 crore market cap.
Second is telecommunications with 46 per cent companies fulfilling the criteria and next is the pharma sector. Incidentally in the FMCG sector only 8 per cent companies have all the requirements.
In fact the same number of companies in this sector were able to achieve Rs 100 crore market cap as at the end of June though all companies have 20 lakh shares as public float.