Of the 105 companies against whom Sebi has passed an order for non-compliance of the public shareholding requirement, 33 fall under the suspended category. Investment bankers said garnering investor interest in these companies for conducting share sales would be a tough ask. They say the most viable option for these companies would be to issue bonus shares to minority shareholders.
Sebi has prescribed ways like offer for sale, an institutional placement programme or a bonus and rights issue for increasing the free float. A bonus or a rights issue for meeting the shareholding requirement has to be offered only to public shareholders. Three companies have taken this route for meeting the minimum public shareholding requirement.
"No public shareholder will come forward to invest in these companies, knowing that it's already not in compliance with Sebi rules. The only option left for such companies is issue of bonus shares," said a head of a domestic investment bank. He added that issue of bonus shares can help restore some investor confidence and then the company should look at revocation of suspension by fulfiling the requirements. A company is suspended from trading if it is not in compliance with clauses of the listing agreement, Securities Contract (Regulations) Rules or fails to make filings under Sebi regulations.
