State-owned firms should adhere to the mandatory 25 per cent public shareholding norms that are applicable to private companies, market regulator SEBI said on Wednesday.
“We are talking to the government that the minimum public shareholding guidelines should not be depended on who the owner is,” SEBI chairman U.K. Sinha told reporters on the sidelines of a capital market summit organised here by industry body CII.
“The SEBI regulations should be neutral to ownership. Our objective is that the same set of rules should apply to all companies, including those owned majority by the government,” he added.
Mr. Sinha further said the regulator has already taken up the issue with the government that they should also issue minimum 25 per cent of shares if they want to get listed.
“Our stand as a regulator is that all companies 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,” Mr. Sinha said.
At present, private sector companies are compulsorily required to have at least 25 per cent public shareholding, while for government-owned companies minimum threshold is only 10 per cent.
The 25 per cent public float norm was implemented last fiscal by the SEBI, following which many companies including bluechips like Wipro had to bring down promoters holding.
There are close to 30 listed 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.
Commenting on the much-awaited REIT guidelines, Mr. Sinha said, they had dialogue with the government and expect that tax-break will be announced shortly, post which SEBI will issue the final guidelines.
SEBI is also working on infrastructure investment trust, and will be able to finalise its recommendation shortly. The regulatory body is also working on a stronger set of insider trading regulations.
On delisting norms, Mr. Sinha said SEBI has come out with a discussion paper on delisting guidelines and received a lot of feed back on current norms.
As a part of measures to boost primary market sentiment, SEBI plans to correct the anomaly in the minimum issue size of IPOs.
At present, all companies with a post-issue capital of below Rs. 4,000 crore are required to offer at least 25 per cent stake in the IPO, while companies with above Rs. 4,000 crore post-issue capital are required to offer at least 10 per cent.
Because of this anomaly, corporates have a tendency to show valuation of the company is Rs. 4,000 crore plus.
“We are trying to remove this anomaly very shortly,” Mr. Sinha said, adding: “There have been demand of increasing in quota of the qualified institutional investors portion and a reduction in the retail portion in the public offerings. SEBI is not in favour of this suggestion“.
SEBI is also working towards correcting discrepancies in its ESOP guidelines and implementing an IT system that will ensure that repetitive filing of the same information is avoided.
SEBI has also set up a core group to review the annual information memorandum filed by companies. The group has been given three months to suggest changes and make life easier for corporates.
