Government has notified rules for allowing minimum 25 per cent public shareholding in public sector undertakings (PSUs), which will allow greater share sale in state-owned entities and help meet annual disinvestment targets.
To comply with these norms, over 30 listed PSUs will need to raise their public shareholding to minimum 25 per cent by August 21, 2017, as per a notification for amendment to the Securities Contracts (Regulation) Rules.“Every listed public sector company which has public shareholding below twenty five per cent... Shall increase its public shareholding to at least 25 per cent, within a period of
three years, in the manner, as may be specified, by the Securities and Exchange Board of India,” the Finance Ministry has said in its new notification for PSUs.The move would help in promoting wider investor base in listed state-run companies and also provide a boost to the Government’s plan to raise funds from disinvestment programme.In June 2010, the Government had asked PSUs to attain minimum 25 per cent public holding, but these norms were relaxed later on. However, a fresh proposal was mooted earlier this year and subsequently Sebi’s board approved in June a proposal to require PSUs to have minimum 25 per cent public holding.
Previously, the listed PSUs were required to have at least 10 per cent public holding, whereas the minimum public holding in non-PSU listed companies is already 25 per cent.The non-PSUs were also asked in June 2010 to attain minimum 25 per cent public shareholding within three years. Following the expiry of this deadline in June 2013, 105 listed companies were found to be non-compliant with these norms and necessary actions were initiated against them by regulator Sebi.
The new notification would bring in uniformity among all listed entities, irrespective of their promoter being the government or private sector entities, when it comes to minimum threshold limit for non-promoter or public holding.