Govt may modify 25% public holding rules, if needed

The government today said it may consider changes in recently announced norms for minimum 25 per cent public holding in listed companies, if need arises.

"The Ministry of Finance and the Department of Disinvestment are receiving different points of view from public sector enterprises and other stakeholders. So, if there is any need for modification or correction or amendment, that will be done," Finance Secretary Ashok Chawla told reporters on the sidelines of a CII seminar here.

The Finance Ministry had recently come out with a notification asking all the listed companies to reduce promoters holding to at least 75 per cent.

The listed companies will have to increase public holding by at least 5 per cent each year to comply with the norms.

Certain firms have expressed difficulty in complying with the norms.

Sebi Executive Director Usha Narayanan said: "We are getting feedback from the markets."

In fact, Disinvestment Secretary Sumit Bose said sell-off in IndianOil, in which public holding is less than 25 per cent, is not on the cards.

He also said that the government is on track to mop up Rs 40,000 crore estimated through disinvestment this fiscal.

When asked what if the companies do not comply with the norms, Chawla said delisting is the biggest penalty for erring companies.

"There is delisting as the biggest penalty. Not automatically, but there is a possibility," he added.

To a query whether 25 per cent public holding will prompt the government to increase the target of mopping up Rs 40,000 crore through disinvestment this fiscal, Chawla said that the sell-off target is intact.

"The two issues (disinvestment target and 25 per cent public holding norms) are different. Disinvestment target given in the Budget speech, those number remains. So, it is not a direct or indirect devise to increase the divestment target for the current year," he said.