Apropos your edit “Disinvestment disrespect” (January 6), it is worth noting that there are more than 100 companies – including many renowned and frequently traded companies – that have had less than 25 per cent public shareholding for the past two to three years. These companies are struggling to comply with Clause 40A that makes it mandatory to maintain public shareholding of at least 25 per cent.
The stock exchanges and the Securities and Exchange Board of India (Sebi) realise the difficulty companies face in fulfilling this provision and, thus, provide measures that help firms do so. In 2010, Sebi relaxed the rules and granted companies three years to comply with the clause. And now, once again, Sebi has introduced the mechanism of the institutional placement programme (IPP). This comes as a breather for companies – including public sector undertakings – that have not been able to meet the listing agreement.
It would, therefore, be incorrect to see this move as a tool adopted by the government and make allegations about Sebi’s autonomy by saying it is merely providing the government with a means to tackle the fiscal deficit. Sebi has come up with an appropriate measure. If it comes as a breather for the government, too, so be it.
Vaibhav S Bakhare Mumbai
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