Continuous listing norm to be amended soon

The continuous listing agreement is expected to be amended in a day or two, making it mandatory for existing promoters to ensure that the non-promoter holding in their companies is at least 25 per cent.

Though recently the Takover Code was amended by the Securities and Exchange Board of India (Sebi) and an indication was given that promoter's holding beyond 75 per cent would result in delisting, changes in the listing agreement to this effect would have a grave impact on existing promoters whose stakeholding is above the 75 per cent limit.

Sources said, "this will have a very big impact on the markets, as it means that all those promoters with stakeholding of above 75 per cent, will have to either divest their holdings or buy the remaining shares and get themselves delisted."

The fear is that it could work as a dampener on the market sentiments.

The continuous listing agreement is under the jurisdiction of the stock exchanges and once it is amended promoters will have no choice other than to abide by it.

Even with the amendments in the Takeover Code, there has been some ambiguity whether the 25 per cent non-promoter holding would be applicable to existing promoters and whether it would be applicable only in the case of mergers and acquisitions.

Earlier in the day, Sebi chairman G N Bajpai talking to reporters on the sidelines of a function on capital markets said that detailed guidelines on the stakes to be held by promoters would be issued in due course, along with the time frame necessary.

He also said that an assurance had been given to Parliament that every company over a period of time must have at least 25 per cent of capital in the hands of the public.

Earlier this week, Sebi issued a gazette notification amending the Takeover Code, prohibiting creeping acquisition beyond the 55 per cent level, and any further stake acquisition only through the public offer route.