The Securities and Exchange Board of India (Sebi) may grant publicly listed companies two years to increase the minimum public shareholding from 25 percent to 35 percent, which was proposed by finance minister Nirmala Sitharaman in her maiden Budget on Friday, Business Standard reported, citing sources.
"The compliance and time frame would be similar for all listed companies, including public sector undertakings," a government official told BS, adding that the market regulator would come up with a detailed framework after consulting with all stakeholders.
However, Sebi is concerned with the implications of the takeover code regulations, if the promoters holding has to be limited to 35 percent, one of the sources said, as mentioned in the report.
The proposal made in the Union budget would see promoters shareholding reducing to 65 percent from the current limit of 75 percent. While it comes as good news for the investors, it may not sit well with India Inc.
"Experts believe having a 35 percent public float is positive in terms of better price discovery for stocks, increasing India's weight in the global indices, and better corporate governance standards. However, it could also make acquisition costly, as buyers who breach the 65 percent promoter holding might be forced to again offload shares in the market," the report added.
An estimated 250-plus companies will be impacted which have over 65 percent promoter shareholding.