JOIN USPSUs are free from 25% float stipulation
Now the PSUs would have to reach a level of 10 per cent public holding in three years for remaining listed in stock exchanges, a notification issued by the Finance Ministry said here.
Just a few months back the government had made it mandatory for all listed companies—both in the public and private sectors— to divest at least 25 per cent holding for the public from the promoters’ stake from the prevailing norm of 10 per cent.
Analysts say the government diluted the stringent condition in case of PSUs in the wake of ongoing apprehension that mandatory condition of 25 per cent holding would flood the stock market thus affecting the PSU disinvestment exercise of the government.
The government has set a target of mobilizing funds to the tune of Rs 40,000 crore through PSU disinvestment in the current fiscal.
Through issue of a notification in June, the government had made it mandatory for all listed companies to raise public holding to at least 25 per cent, with a minimum of at least 5 per cent stake a year by promoters to reach the threshold limit.
But the government was understood to have received feedback from experts that this would have compelled several PSUs to approach market to raise their public holding as stipulated under the new guidelines.
This would have also crowded the stock market with several PSUs competing with private firms to raise funds in the market.
Besides market experts felt that market did not have the appetite for so many offers and the flurry of issues would dampen market sentiment. This in turn could affect the PSU disinvestment exercise.
However, in the revised notification the Finance Ministry asked listed private sector firms to increase public stake in them to 25 per cent in three years, as stipulated earlier.