Firms plan to seek extension of June deadline by Sebi

With less than two months left for lowering their promoter holding to 75 per cent, many private sector companies are planning to petition market regulator Securities and Exchange Board of India (Sebi) to relax the norms, either by way of deadline extension or relaxation in the compliance procedures.

While Sebi has so far ruled out any extension in the deadline, it is open to the idea of assisting non-compliant companies in meeting the norms by permitting new methods to increase the public shareholding to a minimum of 25 per cent.

As per norms for listed companies announced in June 2010, all private sector companies were asked to attain a minimum public holding of 25 per cent by June 2013, while PSUs were asked to increase their public shareholding to at least 10 per cent by August 2013.
According to shareholding data, about 150 companies that currently have public holding of less than 25 per cent such as DLF, Tata Communications,  Fortis Healthcare, Bajaj Corp, Adani Ports, Adani Enterprises, JSW Energy, Novartis, Oberoi Realty and Puravankara Projects.

Together these companies would need to sell shares worth over Rs 20,000 crore to meet the norms. While some companies said they are looking for an extension, others want Sebi to allow them to meet the guidelines through restructuring of their various group entities and share-transfer routes.

Sebi is of the view that such requests would be considered on case-to-case basis, but  averse to the idea of extending the deadline as it was set nearly three years ago, a senior Sebi official said.

He said many firms are  holding back plans on hopes for an extension, citing adverse market conditions. “The data shows that rarely any attempt to sell the shares through OFS (Offer for Sale) or other routes has failed so far and many companies have successfully managed to meet the guidelines,” he added. After the expiry of the deadline, Sebi would ask the stock exchanges to issue warnings to shareholders about potential penal actions against erring companies.