PSUs have only 3 years to make 25% of their shares public: SEBI
With a view to boost primary markets, stock markets watchdog Securities and Exchange Board of India (SEBI) announced a number of reforms pertaining to IPO and Offer-for-Sale. SEBI proposed that all listed PSUs (Public Sector Undertakings) must have at least 25% public shareholding in 3 years.
At present, there are over 36 PSUs where the government controls around 75%. Some of these companies include Coal India, NHPC and NTPC.
The market regulator opined relaxing the restrictions imposed on sale of bonus shares held by promoters or other investors during IPO.
As per SEBI chief UK Sinha, minimum dilution to public in IPO is to be 25% or Rs 400 crore.
Previously, if a company had more than Rs 4000 crore, it was permitted to issue only 10% which is equivalent to Rs 400 crore worth of shares. On the other hand for others if they had even Re 1 less than that then they could issue 25% which is around Rs 1000 crore.
But now this numerical incongruity has been removed and it will be 25% percent or Rs 400 crore whichever is lower. Earlier there used to be a tendency on the part of the corporates to bring their valuation to Rs 4000 crore whether they were actually worth Rs 4000 crore or not. Now that tendency is likely to moderate and they will be motivated to have real valuation. And those who are coming through with this 10% they will be given 3 years time to come to 25%.
Thus, the uneven requirement of minimum public shareholding of 25% for private promoters and only 10% for government as a promoter will be removed and it will now be made uniform. To bring this reform securities contract regulation rules will be amended in order to provide for minimum public shareholding of 25% to all the public sector companies. A 3-year time has been given to the companies to make adjustments to comply with the new requirements.