Within days of making it mandatory for listed companies to have at least 25 per cent public holding, the government today said it was open to changes depending on the feedback it was getting.
Likewise, market regulator Securities and Exchange Board of India (SEBI), which was reported to be apprehensive about the impact of the such a decision on the stock market, said it was also getting the feedback on the issue. "The Ministry of Finance and the Department of Disinvestment are receiving different points of view from public sector enterprises and other stakeholders. So, if there is any need for modification or correction or amendment, that will be done," Finance Secretary Ashok Chawla told reporters on the sidelines of a CII seminar in New Delhi.
SEBI executive director Usha Narayanan said, "We are getting feedback from the markets." The concept of 25 per cent public holding was first floated by the Finance Ministry in 2008, but changes in the concerned regulations were announced only last week.
The government, on June 4, announced that all the listed companies should increase the public holding to 25 per cent in a phased manner and the equity dilution of at least five per cent in a year was made a must for reaching threshold limit. This had led to selling pressures on the stock market in India in the next trading session on Monday and the finance ministry had subsequently said the decision would not result in flooding of public issues.
Following the decision, many experts and market analysts, and also some of the listed companies, had expressed reservation in complying with the norms. According to the new rules, non-compliance of public exposure conditions could lead to de-listing of any entity. When asked what if the companies do not comply with the norms, Chawla said delisting is the biggest penalty for erring companies.
"There is delisting as the biggest penalty. Not automatically, but there is a possibility," he added. To a query whether 25 per cent public holding will prompt the government to increase the target of mopping up Rs 40,000 crore through disinvestment this fiscal, Chawla said that the sell-off target is intact.
"The two issues (disinvestment target and 25 per cent public holding norms) are different. Disinvestment target given in the Budget speech, those number remains. So, it is not a direct or indirect devise to increase the divestment target for the current year," he said. In the meanwhile, Disinvestment Secretary Sumit Bose said any sale of equity in IndianOil, in which the government has over 78 per cent stake, is not on the cards. He also said that the government is on track to mop up Rs 40,000 crore estimated through disinvestment this fiscal.