Sebi believes new public shareholding rule difficult to implement, says report

The Securities and Exchange Board of India believes the recent budget proposals, particularly the recommendation that the minimum public shareholding be raised to 35 percent, would undermine its role as regulator, The Economic Times reported, citing a senior official, who added that Sebi has conveyed the same to the government.

“Going forward, this has to go up from 25 percent to 35 percent and ensuring compliance would be greatly impacted particularly from PSUs as Sebi has to depend on government for funding,” the official was quoted as saying in the report.

In the budget, the government proposed that Sebi transfer the surplus funds to Consolidate Funds of India (CFI) and take prior approval from the government for its annual capital expenditure plans.

“Regulatory financial independence is core to ensuring arm’s length relationship with the government,” the Sebi official told ET. “This is essential to ensure regulatory compliance from listed PSUs and other government companies without getting adversely influenced by the presence of government shareholding and representatives in these companies.”

As many as 31 PSUs including Punjab National Bank, Hindustan Aeronautics Ltd, Bank of India and Corporation Bank have still not met the 25 percent minimum public shareholding norm, the report added.