25% public exposure must for listed Companies - Govt

The government Friday made it mandatory for listed companies to raise public shareholding to 25 per cent, with at least five per cent dilution a year, a move that would attract more investors and check price share manipulation. In keeping with the budgetary promise, the Finance Ministry amended the relevant regulations to the effect that "the minimum threshold level of public holding will be 25 per cent for all listed companies."Accordingly, all listed entities would have to dilute at least five per cent additional equity annually till they reach the threshold limit of 25 per cent. And fulfilment of this condition would be must to remain listed.
The new rules were announced shortly after close of stock market. The BSE benchmark Sensex, which rose by 95 points Friday on top of a 450-point rally in past two days, could come under pressure on Monday, analysts said. For a company seeking listing, it would have to dilute 25 per cent in one go in case the issue size is just up to Rs 4,000 crore. However, those already in the process of going public and have filed draft prospectus could disinvest stipulated 10 per cent and later meet the condition as notified Friday. The decision on mandatory increase in public exposure of a company to 25 per cent had been hanging fire for more than a year due to differences the market regulator SEBI had with the Finance Ministry.