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Shareholding Lowdown

PSUs that have public shareholding of less than 10 per cent will have to dilute their stakes as required by SEBI…

December 16, 2010: As per the public holding guidelines issued by Sebi, it was made mandatory for the listed private sector companies to have a minimum public shareholding of 25 per cent by June 2012, while for public sector companies (government-owned) it was kept at 10 per cent by August 2012. Also, Sebi allowed companies to adopt any of the following methods to raise the public shareholding to the required level:
(a) Issuance of shares to public through prospectus; or
(b) Offer for sale of shares held by promoters to public through prospectus; or
(c) Sale of shares held by promoters through the secondary market

January 3, 2012: Sebi allowed two additional methods for the purpose of complying with minimum public shareholding requirements. The methods allowed were: Institutional Placement Program (IPP) and Offer for Sale of Shares through the stock exchange.

Aug 29, 2012: Sebi once again amended its rules which allowed the promoters to dilute their stakes by way of issuing rights and bonus shares to the public shareholder. The promoters will have to forgo their right or bonus shares entitlement.

Sep 12, 2012: Sebi mulled the idea that listed public sector companies should also maintain at least 25 per cent public shareholding as against 10 per cent mandated by the present norm. Sebi chairman U K Sinha wanted equitable treatment to public sector and private sector entities. But it has not been mandated.

The big guns
Following is the list of Public Sector Undertakings which have public shareholding of less than 10 per cent as required by Sebi. The companies will have to dilute their stakes using the above mentioned ways or companies which have public holdings near 1 per cent or less can easily delist themselves from the exchange.

Bowing out
The list shows the companies which have delisted themselves from the exchange after Sebi came up with minimum public shareholding mandate. These companies had very less public holdings and enough reserves for an open offer. The list contains Ircon International, a PSU. Out of these six companies, three are owned by foreign promoters — Alfa Laval, Exedy India and Atlas Copco.

Which way to go?
The table contains companies in which public shareholding is less than 15 per cent and have substantial cash and cash equivalents which can be used out of sufficient reserves. These companies have the option of going the delisting way rather than diluting the promoter’s holdings. Since the promoter shareholding is so high, these companies might have a tough time diluting their stakes amid this choppy market situation.