PSUs failing public holding norms to face action: Sebi

As per Sebi's minimum public shareholding norms, all the listed public sector entities need to have at least 10% public holding by August 8

As a deadline looms for public state units (PSUs) to achieve a minimum 10 per cent public holding, Sebi on Tuesday said the government had assured it on complying with these norms, even as the market regulator cautioned non-compliant entities would face action.      Under the norms, all the listed PSUs need to have at least 10 per cent public holding by August 8.      

Earlier, the deadline for the private sector companies to attain a minimum 25 per cent public holding expired on June 3 and Sebi took strong actions against promoters and directors of 105 non-compliant companies as on that date.     

Asked whether Sebi would initiate stringent actions in case of non-compliance by PSUs as well, Sebi Chairman U K Sinha said: "Yes, but I will also like to say that the government has assured me through a letter that they are going to implement it."      

About ten PSUs still need to achieve minimum 10 per cent public float by sale of shares cumulatively worth about Rs 3,000 crore.     

The government had earlier told Sebi that the rules could be relaxed for loss-making PSUs, but the regulator insisted on all listed entities meeting these norms.     

"Sebi's position is very clear. Any company which is in violation of Sebi's minimum public shareholding guidelines and is defaulting, it should be punished," Sinha said here during a conference on venture capital investments.     In the run-up to the expiry of deadline for private sector companies, Sebi had held consultations with the non-compliant companies to encourage them meet the deadline and had also sent them reminders.     

A similar process is being followed for PSUs as well and Sebi has written to various government departments in this regard. Sebi has written to the non-compliant PSUs directly as well, requesting them to take appropriate steps immediately to ensure compliance to the deadline.     

The Finance Ministry has also written to the controlling ministries of these PSUs to ensure compliance to the Sebi deadline and told them that non-compliance would invite punitive action by the regulator.     

Talking about another issue of banks adopting a 'name and shame' policy by publishing the photographs and names of loan defaulters and whether Sebi would consider a similar exercise, Sinha said that the market regulator has already a strong mechanism in place for making public the names of defaulters.      

"If we impose a hefty penalty, first thing we do is put it on our website. So we have a mechanism in place for anybody doing any default of any Sebi regulation. Once we reach conclusions (on cases) we publish them on our website.    

"We are quite transparent about it. We are already doing it (making public the names of defaulters)," he said.