The board also diluted its 25% minimum public holding clause by exempting certain classes of companies from maintaining such minimum float to remain continuously listed on the bourses. Sebi had, in August last, asked all listed companies to maintain minimum 25% public holding within the next two years.
The board decided to forward the Kania committee recommendations to the law ministry. The Kania group had suggested a slew of changes in the Sebi Act, including the setting up of the single Enquiry and Adjudicating Authority and impart it a quasi-judicial status. The Sebi move will speed up the disposal and help the regulator to clear the backlog of pending cases.
FE had reported on Monday the Sebi move to approve all the major recommendations of the Kania group.
The feedback on the minimum public holding proposal received by Sebi suggested that it will be very difficult for companies with large market capitalisation (M-Cap) and lower public float to comply with Sebis new proposal. Also, there was uncertainty about those companies which entered the market well before the section 19 (2) (b) of Securities Contracts Regulations Act (SCRA) came into existence. This SCRA section had given relief to certain companies (mainly infrastructure companies) who want to tap the market with an issue of over Rs 100 crore to dilute only 10% of its equity.
Sebi sources said, in this backdrop it has been decided that companies having M-Cap of Rs 1,000 crore or more and having 2 crore shares as public holding will be exempted from having minimum 25% public holding for continuous listing.
It also cleared certain clarifications with respect to Indian Depository Receipts (IDRs) to be issued by foreign companies who want to raise money from domestic market. Certain clarifications with respect to portfolio management services (PMS) were also approved, said informed sources.