Listed companies must have at least 25% public stakes

HT Correspondent, Hindustan Times
Mumbai, June 04, 2010

As many as 15 of India’s largest companies belonging to the BSE 100 —including Wipro, DLF and NTPC — will have to dilute their shareholding in order to take their public holding to a minimum of 25 per cent as the government amended the Securities Contracts (Regulation) Rules on Friday. Accordingly, listed companies having less than 25 per cent public holding will have to reach that level through an annual addition of not less than 5 per cent to public.

As a result, there nine government owned companies and six private companies in the BSE 100 will have to come out with follow on public offerings, offers for sale or institutional sales to dilute their promoter’s stake. If they do so they will have to raise Rs 114,000 crore today.

All told, there are 230 companies out of the 3,634 companies (that are listed at the Bombay Stock Exchange and disclosed their shareholding pattern as on March 31, 2010) that have their public holding below 25 per cent threshold.

Experts say, this is a move in the right direction and will bring more depth to the market. “It will bring more liquidity, depth and efficient price discovery mechanism in the market,” said Aseem Dhru, chief executive officer, HDFC Securities.

While public sector units (PSUs) can look for follow on public offerings private companies may adopt other routes. “The private sector companies may go for secondary block or may raise it through qualified institutional buyers,” said Dilip Kadambi, managing director, RBS Investment Banking.

This will give the government’s disinvestment programme a shot in the arm. “Now that it is a law, all public sector companies that fall below this level will see disinvestment happen as they have no option but to do it and in the process will also raise the disinvestments proceed for the government,” said a market expert on conditions of anonymity.

The amendment says that existing listed companies will have to reach that level of 25 per cent of public holding by an annual addition of not less than 5 per cent.

However, new listings with post-issue capital of more than Rs 4,000 crore may be allowed to go public with 10 per cent public shareholding and comply with the 25 per cent norm through an annual addition of 5 per cent in public holding.

Only certified agents to sell MF products from today: SEBI

Press Trust Of India / Mumbai June 1, 2010, 0:30 IST

The Securities and Exchange Board of India (SEBI) today announced that mutual fund (MF) distributors and agents would need a National Institute of Securities Market (NISM) certificate to sell policies from tomorrow.

“With effect from June 1, associated person, ie, distributors, agents, or any person engaged in the sale of MF products, shall be required to have a valid certification from NISM,” SEBI said in a notification.

Experts said the move was intended to assure quality service to investors and bring the unorganised segment under its loop to curb mis-selling. “SEBI wants to ensure that the customers receive quality service from investors. SEBI feels certified agents and distributors will provide investors with good suggestions,” SMC Capitals Equity Head Jagannadham Thunuguntla said.

The notice added that if the said person possessed a valid certificate of the AMFI Mutual Fund (Advisors) Module before June 1, he would be exempted from the requirement of having an NISM certificate.

NISM is a public trust set up by SEBI as an autonomous body.