Budget resurrects regulation for minimum 25%
The Economic Times, July 8, 2009, Page 1
THE DAY AFTER, ET DELVES DEEPER INTO THE BUDGET SPEECH TO READ THE MINUTIAE...
The market may have failed to register a weighty reform that the FM revived. Here’s that
move along with the other hits and misses & the full measure of the price impact...
Deepshikha Sikarwar NEW DELHI
PROMOTERS of some of India’s largest companies may have to initiate moves to bring down their stake to 75%, with the government planning to implement a rule stipulating minimum public shareholding in listed firms, a finance ministry official said.
State-run companies such as IOC, NTPC, NMDC and MMTC, and private firms such as Wipro, Reliance Power and real estate group DLF will have to take steps by December to raise public shareholding to the stipulated 25% over 3-5 years. The finance ministry had put out a proposal in this regard last February to deepen and broaden the stock market. The move could temper volatility in these stocks and the wider market by increasing the free float and reducing the concentration of shares in a few hands.
Software major Wipro is 80.63% owned by its promoters, the Premjis, while in the case of Reliance Power and DLF, the promoters hold nearly 85% and 88.55%, respectively.
The proposal, which had been put on the back burner after opposition from the Left and the global downturn that drove down valuations, has now received a fresh impetus with the finance minister Pranab Mukherjee making a statement in his budget speech. The budget clearly said the norm would uniformly apply to all listed companies, including PSUs.
The stock markets that crashed after the budget presentation as it failed to spell out a clear road map on disinvestment or fiscal deficit, may have missed to see the significance of the minister’s statement. Going by the norms, the government will have to dilute its stake in many blue-chip firms.
The proposed norms also have implications for listed companies from sectors such as IT, infrastructure, communication and entertainment that had been allowed to list with a 10% public float on account of a special exemption by the market regulator. The proposal also seeks to take away the regulator’s discretionary powers on this issue.
At present, public stake includes shares of individuals and FIs, foreign portfolio investors, MFs and NRIs, staff and others. The ministry will also decide on amending this definition. Its draft plan had said the threshold public holding must be calculated without accounting for non-promoter stakes such as foreign portfolio investors, institutional investors and MFs.
The Economic Times, July 8, 2009, Page 1
THE DAY AFTER, ET DELVES DEEPER INTO THE BUDGET SPEECH TO READ THE MINUTIAE...
The market may have failed to register a weighty reform that the FM revived. Here’s that
move along with the other hits and misses & the full measure of the price impact...
Deepshikha Sikarwar NEW DELHI
PROMOTERS of some of India’s largest companies may have to initiate moves to bring down their stake to 75%, with the government planning to implement a rule stipulating minimum public shareholding in listed firms, a finance ministry official said.
State-run companies such as IOC, NTPC, NMDC and MMTC, and private firms such as Wipro, Reliance Power and real estate group DLF will have to take steps by December to raise public shareholding to the stipulated 25% over 3-5 years. The finance ministry had put out a proposal in this regard last February to deepen and broaden the stock market. The move could temper volatility in these stocks and the wider market by increasing the free float and reducing the concentration of shares in a few hands.
Software major Wipro is 80.63% owned by its promoters, the Premjis, while in the case of Reliance Power and DLF, the promoters hold nearly 85% and 88.55%, respectively.
The proposal, which had been put on the back burner after opposition from the Left and the global downturn that drove down valuations, has now received a fresh impetus with the finance minister Pranab Mukherjee making a statement in his budget speech. The budget clearly said the norm would uniformly apply to all listed companies, including PSUs.
The stock markets that crashed after the budget presentation as it failed to spell out a clear road map on disinvestment or fiscal deficit, may have missed to see the significance of the minister’s statement. Going by the norms, the government will have to dilute its stake in many blue-chip firms.
The proposed norms also have implications for listed companies from sectors such as IT, infrastructure, communication and entertainment that had been allowed to list with a 10% public float on account of a special exemption by the market regulator. The proposal also seeks to take away the regulator’s discretionary powers on this issue.
At present, public stake includes shares of individuals and FIs, foreign portfolio investors, MFs and NRIs, staff and others. The ministry will also decide on amending this definition. Its draft plan had said the threshold public holding must be calculated without accounting for non-promoter stakes such as foreign portfolio investors, institutional investors and MFs.
Posts
No comments:
Post a Comment