Paving way for sale of PSU shares worth an estimated Rs 60,000 crore over three years, the government has notified rules for minimum 25 per cent public shareholding in listed state-owned firms.
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.
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.
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 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.
“… 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 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.
As per the current valuations, the dilution in promoter holding in over 30 listed PSUs would lead to the government garnering over Rs 60,000 crore through sale of shares.
However, this figure might change as these share sales would take place over a long period of nearly three years.
The major PSUs where public shareholding is below 25 per cent include Coal India, SAIL, MMTC, NHPC, NMDC and SJVN.
While private sector firms were given three years time in June 2010 to achieve minimum 25 per cent public holding, the PSUs were also given three years in August that year to increase their public shareholding to at least 10 per cent.
The earlier proposal in June 2010 also required PSUs to attain minimum 25 per cent public holding, but these norms were relaxed later at that time.
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.
In case of 105 companies that were found non-compliant to minimum public holding norms, Sebi last year issued directions, including freezing of voting rights and corporate benefits such as dividend, issuance of rights and bonus shares, among others, with respect to excess of proportionate promoter shareholding in respective companies.