The finance ministry has decided to put on hold the 25% minimum public float norm for state-owned companies, official sources said. This happened after the department of disinvestment pointed out the fresh norms do not conform with the pledge made by finance minister Pranab Mukherjee in Parliament on December 1, 2009.
The new norms are also at variance with the disinvestment policy earlier approved by the Union Cabinet in November 2009, that envisages 10% stake sale in listed, profit-making PSEs. Responding in a verbatim debate in Rajya Sabha, Mukherjee had said the UPA-II government will neither sell more than 10% stake nor will it go for strategic sale in PSEs in the next five years.
?So far as the present mandate of this government for the five years is concerned, we are not going beyond 10% (stake sale in PSEs); we are not going for strategic sale,? the finance minister said. The finance minister?s pledge has put the finance ministry in a piquant situation, which apparently did not take cognizance of this fact while announcing the 25% minimum public float norm for all companies.
The department of economic affairs in the finance ministry has thus decided to keep in abeyance the 25% public norm for PSEs, until the matter is clarified. State-owned companies going for listing, therefore, can sell their shares as per the earlier norms, that existed prior to the amendment in the Securities Contract (Regulations) Rules. The changes in these regulations had mandated private as well as state-owned companies to achieve a minimum public float of 25%, by diluting at least 5% stake annually.
Around three dozen PSEs like would be required to come out with public offers totaling over Rs 1 lakh crore in case they have to comply with the 25% norm. Finance secretary Ashok Chawla said on June 9 the government was open to change the 25% public float criteria, especially for PSEs.