Members of SEBI's committee expressed concern over the proposal for public shareholding

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New delhi date. August 12, 2019, Monday

Securities and Exchange Board of India (SEBI) sources said most of the members of the SEBI committee have expressed their concerns against the government's plan to increase the minimum public shareholding. The proposal was announced to increase the minimum public shareholding for listed companies from 5% to 5%.

A 3-member committee has not yet decided on the issue. Several proposals have been submitted on this proposal and the exchange of ideas is still ongoing, the sources added.

Issues such as the current state of the market, difficulties in compliance with the norms by government companies, the possibility of capital flows and disadvantages for multinational companies are becoming a topic of discussion.

The government has come up with a proposal to increase the weightage of Indian companies in global indices. Due to the high share of promoters this weightage has been limited.

If the market is to increase liquidity, the amount of free float shares will have to be increased. In many major countries of the world, when the shareholding volume is 5%, the purpose behind raising this limit in India is being questioned.

The proposal is likely to affect about 1 out of the 5 companies listed on the stock market. Looking at the available data, there are 3 listed companies in which the shareholding of the promoters is more than 5%.

In which the shareholding of the promoters is more than 5%, it mainly includes companies like Wipro, DeMart, TCS, Bandhan Bank, Bank of India, etc. In the recent past, it has been seen that a large amount of money has been raised by promoters by mortgaging shares to the promoters. In case of companies falling behind after raising money, financial institutions, including banks, have a chance to suffer.

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