Need To Examine Various Issues On 35% Minimum Public Shareholding Plan, Says SEBI Chairman Ajay Tyagi
Ajay Tyagi, chairman of Securities and Exchange Board of India during a press conference in Mumbai (Source: PTI)

Need To Examine Various Issues On 35% Minimum Public Shareholding Plan, Says SEBI Chairman Ajay Tyagi

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The Securities and Exchange Board of India on Wednesday said various issues need to be examined before deciding on mandating 35 percent minimum public shareholding in listed companies as many public sector undertakings are yet to meet even the 25 percent threshold.

Responding to a query about the proposal for increasing the minimum public shareholding level, SEBI Chairman Ajay Tyagi said that liquidity needs to increase in terms of better price discovery, more trading and dispersed shareholding, among others.

Also read: SEBI Relaxes Norms To Allow Smart Cities Raise Funds Through ‘Muni Bonds’

“There are certain issues that need to be further examined. We will need to look at global regulations whether it is mandated beyond 25 percent anywhere. What is the right level to be mandated. What will be the short term and long term implications for the companies and for the market,” he told reporters after SEBI board meeting.

Right now, Tyagi said initial public offering market is also not doing very well.

“45 percent of listed PSUs as of now don't even meet the 25 percent requirement and they have been given time till August 2020 to comply with (the requirement). All these issues need examination and consideration. For the time being, I will say we will examine all those issues,” he noted.

Currently, listed companies should have at least 25 percent public shareholding. In the latest Union Budget, Finance Minister Nirmala Sitharaman proposed 35 percent minimum public shareholding requirement for listed companies.

Also read: SEBI Eases Requirements For FPIs

To a query on whether consultations happened with the government over foreign portfolio investment surcharge announced in the Budget, Tyagi did not give a direct reply. “Inputs on various issues that are sought by the government from time to time, we have shared those with the government. But that is between us and the government.”

Responding to another question on the Budget proposals on FPI surcharge and an additional tax liability on buybacks, the SEBI chief said the regulator has taken up with the government for clarifications. However, it was not clear whether Tyagi was commenting on the buyback or the FPI surcharge issue.

Also read: SEBI Approves Tighter Norms For Full Disclosure On Loan Defaults With Rating Agencies

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