On the backdrop of the Government setting up a deadline of June 2013 for all private sector Companies and August 2013 for all PSUs to meet Shareholding regulations, PHD Chamber of Commerce and Industry (PHDCCI) today organized a conference on ‘Minimum Public Shareholding: Issues & Challenges’.
Welcoming the Chief Guest of the occasion, Chairman, SEBI, Mr. U. K. Sinha, the Sr. Vice President of PHDCCI, Suman Jyoti Khaitan highlighted that listed Companies are facing the heat with the Securities and Exchange Board of India (SEBI) enforcing 25 % public shareholding deadlines. Khaitan said, “There have been long drawn-out official attempts to ensure a minimum public shareholding among listed Companies. The latest attempt was announced in June 2010, where the Government had amended the Securities Contract (Regulations) Act rules, by ordering all listed companies to have a minimum of 25 percent public shareholding. The limit for public sector enterprises was, however, lowered to 10% in August. The Government has a set a deadline of June 2013 for all private sector Companies and August 2013 for all PSUs to meet these norms. Thus, it is the need of the hour to know the stand of SEBI on it.”
Encircling the importance of articulation about SEBI’s guidelines, the Chairman, SEBI, Mr. U. K. Sinha said that as per the valuation on July 1, 2012, PSUs and Non PSUs together need to raise Rs 32,000 Cr. Breaking it down further, Mr. Sinha added that out of the mentioned amount, PSUs need to raise Rs11, 000 Cr where as Non- PSUs share of contribution is Rs. 21,000 Cr.
Insisting that SEBI’s regulation should be followed strictly by the listed companies, Mr. Sinha said, “Though I would accept that SEBI is actively looking for more avenues, but, I would like to reiterate that SEBI has not been disruptive in its policy and approach and have given various opportunities and windows to companies for touching the minimum public shareholding requirement.” He added that despite avenues like, “offer to sale” and “Institutional Placement Plans”, companies never came forward to take benefit out of these.
Corroborating the above mentioned stand on listed companies, Mr. Sinha said that in 2001 under Clause 40A – Minimum Public float on continuous basis was introduced for the first time in our country. In 2006, a two years time frame for achieving 10% or 25% was announced. In 2012, under Rule 19A– a three year time frame was given to PSUs for reaching 10% and to Non-PSUs for reaching 25%. The data from March 2012 shows that out of the total 4977 listed companies 1259 companies have still have not submitted shareholding pattern and 125 companies are lingering below 20%. Highlighting the Price to Book ratio of 3.22, Mr. Sinha stressed on pondering if the ratio is too bad for the companies to reach the minimum public shareholding limit. According to him, while is 2006, when the market was booming then also, Indian companies could reach the minimum requirement.
Sharing the PSUs perspective on the topic, Secretary (Disinvestment), Ministry of Finance, Mohammed Haleem Khan said that there is need of having a larger equity culture along with other punitive steps by SEBI. Free float of equity and fiscal incentivization is what PSUs are looking for at present. According to Mr. Khan, for a healthy market, foot-falls, broad-basing the holdings and good liquidity are the need of the hour.
Amongst others who shared their views were Managing Director & CEO, MCX Stock Exchange, Mr Joseph Massey, Interim CEO, Bombay Stock Exchange of India Ltd, Mr Ashish Kumar Chauhan, Joint Managing Director, National Stock Exchange of India Ltd, Ms Chitra Ramkrishna, Managing Director & Chairman – India Investment Banking, Morgan Stanley India Co Pvt Ltd, Mr V K Bansal, Secretary General, PHD Chamber Ms Susmita Shekhar and Chairman, Capital Market Committee, PHD Chamber, Mr Prithvi Haldea.