Close to 85 listed private sector entities are yet to comply with the capital market regulatorís norms on minimum public shareholding despite the market watchdog taking stringent actions against such non-compliant companies.
According to Prime Database, out of 105 companies that were named in an order by the Securities and Exchange Board of India (Sebi) on June 4, only 20 have complied with the guidelines that call for promoter holding to be reduced to 75%.
In its order in June, Sebi had penalised promoters for not meeting public shareholding norms. The market regulator froze voting rights and corporate benefits Ė dividends, rights, bonus shares, and stock split ó of promoters and directors with respect to the excess of proportionate shareholding of those 105 companies. The market regulator also prohibited the promoters or promoter group and the directors of non-compliant companies from trading or dealing in securities of their respective companies, except for the purpose of complying with the minimum public shareholding rules. Further, Sebi also barred promoters and directors of the non-compliant companies from holding any new position as a director in listed firms.
As many as 64 private companies had successfully diluted their stake before the June 3 deadline. While 51 entities opted for the offer for sale (OFS) route to comply with the guidelines, seven entities chose the institutional placement programme (IPP) way. Further, four entities launched a bonus issue and two used a combination of OFS and IPP.
Meanwhile, since the start of FY12, companies raised R13,187 crore of total money by way of stake sale. In addition, nine companies were unsuccessful in fully diluting their stake. Their auctions were under-subscribed, through which the promoters raised R1,055 crore.
Further, all state-owned entities have successfully complied with the minimum public shareholding norms of 10%. The list includes namely Hindustan Copper, ITDC, MMTC, National Fertilizers, Neyveli Lignite, Rashtriya Chemicals & Fertilisers, State Bank of Mysore and STC. These eight state-owned companies helped the government raise R1,391 crore, which is 3% of FY14 total disinvestment target of R54,000 crore, according to Prime Database. Excess promoter holding in other six listed but loss-making PSUs Ė