New Delhi: Emphasising that all listed companies should be meted out equal treatment, Sebi Chairman U K Sinha pitched for minimum 25 per cent public shareholding for PSUs. At present, private sector companies are compulsorily required to have at least 25 per cent public shareholding, while for government-owned companies minimum threshold level is only 10 per cent.
"In 2010, when it was done, at that time government had a position that in one particular PSU if they float 25 per cent in one go, it will be a problem but now the government has to revisit it," Sinha told reporters after meeting with Finance Minister Arun Jaitley here. There are close to 30 listed Public Sector Undertakings (PSUs) where public investors hold less than 25 per cent stake. The major PSUs where government holding currently stands at more than 75 per cent include Coal India, SAIL, MMTC, NHPC, NMDC and SJVN.
The move is part of Sebi's efforts to deepen the markets and increase public float. Besides, it would also help in promoting wider participation from investors and boost government's plan of raising funds through disinvestment. "Our stand as a regulator is that all cos should be treated alike on all matters, not only public float on corporate governance and all and this is what we have been telling the government," Sinha said.
"The government has to do...the rules are notified by the government," he aded. A time-frame of three years was given to private sector firms in 2010 to achieve minimum 25 per cent public holding. The deadline for 25 per cent minimum public shareholding requirement for private companies ended in June 2013, while the same for the government to reduce its stake to at least 90 per cent in PSUs was August 2013.
When the norms were proposed in 2010, more than 200 companies needed to comply. Incidentally, the Securities and Exchange Board of India (Sebi) had first proposed in June 2010 that all listed companies -- including PSUs -- would need to have a minimum public shareholding of 25 per cent. However, in August 2010, the norms were amended to revise public sector companies' minimum public shareholding norms to 10 per cent (from 25 per cent) within three years. Sebi had taken action against 105 private companies, their promoters and directors for failing to achieve the 25 per cent public float within the stipulated period.
These directions issued by Sebi against these firms included freezing of voting rights and corporate benefits such as dividend, rights and bonus shares among others. Almost all PSUs had managed to meet the guideline before the end of the August deadline. However, the regulator had allowed the government to transfer its holding in excess of 90 per cent in sick PSUs to Special National Investment Fund.
