Public holdings may rise to 35% from 25%

NEW DELHI: Finance Minister Nirmala Sitharaman in her maiden Budget speech on Friday urged Sebi to consider increasing the minimum public shareholding in listed firms to 35 per cent from 25 per cent.If the Sebi goes ahead with the proposal, shares of many MNCs and companies with high promoter shareholding could see some negative action.At present, there are over 1,400 listed companies where promoters had over 65 per cent stake as of latest regulatory disclosures.“Proposal to increase minimum public shareholding from 25 per cent to 35 per cent is a potential negative for MNC and companies with high promoter holding,” said Sanjeev Hota of Sharekhan.There are 14 MNCs, Hindustan Unilever included, which may need to pare 2-10 per cent stake if the proposal is implemented.Amar Ambani of IIFL said many MNCs listed on Indian bourses may consider delisting, if increase public shareholding is implemented. In case of many midcap and smallcap stocks it was better to have more promoter skin in the game since India's capital market is in a developing phase, Ambani saidAmong the Nifty50 companies, five companies, Wipro (73.90 per cent), TCS (72.10 per cent), Coal India (71 per cent) and Hindustan Unilever (67.2 per cent) and Bharti Airtel (67.1 per cent) have promoter holding in excess of 65 per cent as of March 31. Rough estimates suggest that if these firms were to meet the 35 per cent public shareholding, they may need to sell shares worth Rs 1 lakh crore. 70086447 On the other hand, there are 40 PSUs with public holding lower than 35 per cent. Of them 28 still needs to pare down promoter stake to meet earlier guidelines. Last year, the government extended the timeline for PSUs to maintain minimum shareholding norm of 25 per cent to August 2020. They were earlier allowed to have a minimum public holding of 10 per cent. Sebi had earlier in 2013 set a deadline for all listed companies to adhere to minimum shareholding norms. It was later decided the PSUs should also maintain a minimum public shareholding of 25 per cent in line with private companies.

from Economic Times https://ift.tt/30bvLJT