Companies not complying with public shareholding norm to face consequences: Sebi chief

51 companies yet to take steps to increase public shareholding

Indian companies failing to comply with the minimum public shareholding requirement will face consequences, UK Sinha, chairman of Securities and Exchange Board of India (Sebi), warned.

In 2010, the stock market regulator mandated that listed private sector companies must have at least 25% public shareholding.

"There were about 200 non-PSU (public sector undertaking) companies, which are non-compliant. The trading has been suspended for 37 of these 200 companies. So, I am not talking about them. But there are 51 companies who have not taken any measure. I don't want to issue a threat to them in this meeting but I have made it very clear that those who will not follow SEBI guidelines for minimum public shareholding will suffer the consequences. And those consequences are not very difficult to assume," Sinha said at a seminar organised by the Confederation of India Industry (CII) here today.

The deadline to comply with the minimum public shareholding norm is June, 2013.

Sinha, however, noted that the remaining 112 companies have initiated steps to increase public shareholding to 25%.

"Encouraged by the response from the industry, we have tried to facilitate more and more avenues for companies to increase public shareholding. To give you an idea, we have allowed the mechanism of offer for sale and it has been very successful. Many corporates have taken advantage of that. We have now allowed promoters to sell shares in the secondary market and taken a number of other measures to help corporates comply with our guideline," he said.