Listed firms told to go 25% public

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The government on Friday made it mandatory for the companies listed on the stock exchanges to have at least 25 per cent shareholding with the public. This means 179 listed companies will have to issue more shares to the public. This includes the public and private sector giants such as ONGC, NMDC, Reliance Power, DLF and Wipro.

This step could allow the companies to raise around Rs 2 lakh crore from the market, according to a study by Crisil Equities. There are around 179 listed companies where public shareholding is below 25 per cent. This will also check share price manipulation and tackle the problem of over-pricing of public issues.
According to the government notification existing listed companies having less than 25 per cent public holding will have to reach the required level by an annual addition of not less than five per cent to public holding.
A company could increase its public shareholding by less than five per cent in a year if such increase brings its public shareholding to the level of 25 per cent in that year. Every listed company has to maintain public shareholding of at least 25 per cent. If the public shareholding in a listed company falls below 25 per cent at any time, it will have to bring it to the required level within a maximum period of 12 months.
For new listings, if the post issue capital of the company calculated at offer price is more than Rs 4,000 crore, the company will be allowed to go public with 10 per cent public shareholding and comply with the new norms increasing its public shareholding by at least five per cent per annum.
The finance minister had in the budget promised to make companies increase the public shareholding to 25 per and so it amended the Securities Contracts Rules accordingly and notified it on Friday.
The government has also been divesting stake in those PSUs where its stake is more than 90 per cent to increase the public shareholding. The centre also plans to list all the profitable PSUs.