M A I N   N E W S

25 pc public float must for listed firms
Tribune News Service

All listed entities will have to dilute 5% additional equity annually till they reach the threshold limit of 25%

Mumbai, June 4
The government has now made it mandatory for all listed companies to float 25 per cent of their equity as public holdings in a bid to prevent share price manipulation.

The proposal first mooted by Sebi last year and proposed by Finance Minister Pranab Mukherjee in the last Budget has now become law. Under the new amendments to the Securities Contracts (Regulation) Rules, the minimum threshold level of public holding will be 25 per cent for all listed companies. This will include public sector companies where the public holdings is far lower.

Listed companies having less than 25 per cent public holding will have to reach this threshold by diluting not less than 5 per cent of its equity annually.

The government has, however, made it easier for companies coming out with IPOs. For new listing, if the post-issue capital of the company calculated at offer price is more than Rs 4,000 crore, the company may be allowed to go public with 10 per cent public shareholding and comply with the 25 per cent public shareholding requirement by increasing its public shareholding by at least 5 per annum.

For companies whose draft offer document is pending with Sebi on or before these amendments are required to comply with 25 per cent public shareholding requirement by increasing its public shareholding by at least 5 per cent per annum, irrespective of the amount of post-issue capital of the company calculated at offer price.

The new measures are expected to impact public sector companies more than private corporate houses, say analysts. A number of top PSUs like SAIL, NTPC, Power Finance Corporation, MRPL, PowerGrid are among those who will have to dilute promoter holdings.