Sets 3-year deadline for PSUs for achieving minimum public holding
The Securities and Exchange Board of India (Sebi) board today, 19 June 2014, proposed that all listed companies including public sector undertaking (PSUs) shall be required to achieve and maintain minimum public shareholding of 25% of the total number of issued shares within a time period of three years. Under the current rule, while non-PSUs are required to have minimum 25% public shareholding, PSUs are required to have only 10% minimum public holding, which is discriminatory and inconsistent with the broader market design, Sebi said. Sebi will make a recommendation to the finance ministry to make the necessary changes in the Securities Contracts (Regulation) Rules, 1957 for this purpose.
The Sebi board also proposed that minimum dilution to public in an initial public offer (IPO) shall be 25% or Rs 400 crore, whichever is lower, for companies with post capitalisation of less than Rs 4000 crore. This will remove the anomaly that a company just short of Rs 4000 crore market capitalisation was required to dilute about Rs 1000 crore while another company at Rs 4000 crore market capitalisation was required to dilute only Rs 400 crore, Sebi said. In case of dilution of less than 25%, minimum public shareholding of 25% will be required to be achieved within three years of listing, where required under the rules, Sebi said.
In another decision with regard to the primary market, Sebi has decided to increase the anchor investors' bucket to 60% from the current requirement of 30% of the institutional bucket.
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