Promoter dealings frozen for not meeting stake norms

Among those impacted include Tata, Essar, Dhoots and Adanis

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The Securities and Exchange Board of India (Sebi) penal order on 105 companies for failing to comply with the 25 per cent minimum public shareholding norm has hit major industrial houses, including Tata Group, Essar Group, Videocon Industries and Adani Enterprises.

For each, one company has failed to cut promoter stake to at least 75 per cent, the permissible limit for listed firms. As a result, Sebi has banned the promoter groups from dealing in the securities of these.

The order also imposed a freeze on voting rights and corporate benefits, including rights, dividends, bonus, etc, of the promoters, though on a proportionate basis. Directors, as well as promoter shareholders, have also been restrained from taking the position of a director in any listed company, till the company complies with the norm.

The Sebi ban, however, is only expected to impact these groups for a short time, as most of these are in the process of complying with the Sebi regulations.

Tata Sons has been impacted by the Sebi order, as the promoter holding in its telecom arm Tata Tele (Maharashtra) was 77.21 per cent as on June 3, when the deadline for meeting the promoter holding norm expired. “Tata Sons is committed to compliance with the regulator’s requirements and is taking all possible steps to meet the minimum public shareholding guidelines at the earliest,” said a Tata group spokesperson.

Tata Sons has sold 0.52 per cent stake in Tata Tele (Maharashtra) via an offer for sale. It is planning to sell an additional 2.2 per cent. Though Videocon Industries complied with the 25 per cent public shareholding norm in the quarter ended June 2012, an increase in promoter holding in the subsequent quarters rendered the company non-complaint. Though promoter holding in the company currently stands at 69.38 per cent, its global depository receipts, amounting to 8.64 per cent of the total shares, are not considered public float. Therefore, the effective promoter holding is 75.94 per cent. Talking to Business Standard, Videocon Industries promoter Venugopal Dhoot said the promoter group would have to sell about 2,00,000 shares to become complaint. “We failed to meet the public shareholding requirement erroneously. Within a month, we will conduct a share-sale and meet the norm,” he said.

In the case of Essar Group company Essar Ports, promoter holding is 75.54 per cent. It has decided to convert its global depository shares (GDS) held by Port of Antwerp International to ordinary shares. After this, holding would fall to 74.97 per cent. “The company has written to Sebi, informing it of the same. It has also shared the status of the balance dilution by way of conversion of GDS,” said an Essar spokesperson. Earlier, Essar Shipping and Logistics, Essar Ports’ promoter, had sold about 5.3 per cent holding in the company through an offer for sale.

The Sebi ban also impacts Gautam Adani-owned Adani Enterprises, as promoter holding in Adani Ports and SEZ stands at 77.5 per cent. However, the ban is likely hit the company for only a short period — on June 4, Adani Ports sold 66.6 million shares (three per cent) through an institutional placement programme.

When contacted, Adani Ports declined to comment.