Bring on the Public at FinGad.com

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Categorie: Emerging Markets
Submitted 9 months ago by

Ian

The finance ministry’s discussion paper on raising the minimum public holding to be eligible for continuous listing from 10 per cent to 25 per cent is meeting stiff resistance from corporate India. Industry chambers are still noncommittal on their stance. But as the 28 February deadline for suggestions and comments nears, the trepidation over the proposals is giving sleepless nights to promoters who will be forced to offload chunks of their personal holdings.The paper proposes a host of changes in the Securities Contracts Rules that haven’t gone down well with the promoters. For instance, it proposes that if the public holding goes below 25 per cent under any circumstances, “the promoters, management and the company may be jointly and severally liable to bring the public holding to 25 per cent within three months…, failing which appropriate enforcement action, including delisting, may be taken”. The paper also proposes defining the term ‘public holding’ and suggests excluding financial institutions, foreign institutional investors, employees, non-resident Indian/ overseas corporate bodies’ holdings and private corporate bodies from the definition. Essentially, this means that promoters holding 80-90 per cent of their stock will have to pare their share substantially.When they submit their suggestions to the paper by 28 February, corporates are likely to target these specific clauses to be watered down rather... More...

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