There is still hope, the finance ministry has told the Lok Sabha, for an extension of the deadline for companies to meet the stricter norms on public shareholding norms.
The Securities and Exchange Board of India (Sebi), it told the House in a written reply to a query in this regard, had not taken a decision that no extra time would be allowed. The reply said many listed companies had complained the three-year period given for this purpose was too short.
The Securities Contracts (Regulations) Rules, 1957, were amended on June 4, 2010, by the central government and a Rule 19A inserted. This required listed companies to achieve and maintain a minimum public shareholding, of 25 per cent for those in the private sector and 10 per cent for those in the public sector. While the former must do so by June 2013, the latter have till August 2013.
Some listed companies and market intermediaries have asked for extension of the deadline and for flexibility in the manner of raising the public shareholding.
While the notification requiring all listed companies to maintain the required public holding was issued on June 4, 2010, a circular specifying the manner in which it was to be done was issued by Sebi only on December 16, 2010, the Confederation of India Industry has noted.
And, that separate mechanisms designed especially for raising the public shareholding for existing companies, through an Institutional Placement Programme or an Offer for Sale, were introduced by Sebi only in February 2012.
Adverse market conditions and a lack of market depth have also been cited as problems in meeting the deadline. The total amount to be raised by companies to meet the requirement is estimated at Rs 32,000 crore – about Rs 11,000 crore by public sector companies and rest by the private ones.
On its part, Sebi has allowed bonus shares and rights issues as additional avenues for meeting the deadline.
It has said it was open to considering other modes on a case-to-case basis. One of its senior officials, however, categorically said all these were only to help companies meet the mandatory norms before expiry of scheduled date. “This doesn’t mean deferment of deadline,” stressed the official.
