SEBI expresses concerns over 35% minimum shareholding plan

The SEBI panel is yet to take a final decision, the report said.
Majority members of a SEBI committee have expressed concerns over the government's plan to raise minimum public shareholding, according to a report in The Economic Times.

Finance Minister Nirmala Sitharaman in the Budget had proposed that the minimum public shareholding for listed companies be raised to 35 percent from 25 percent.

The 24-member committee, led by former Infosys CFO Mohandas Pai, is yet to take a final decision, the report said.
"There were numerous thoughts on the proposal. There have to be more discussions before forming any view," a source told the paper.Current market conditions, inability of state-owned companies to comply with the mandatory 25 percent minimum public shareholding, potential flight of capital and disadvantages for listed MNCs were some of the complaints raised, the report said.

The government's move intends to improve weightage of Indian companies on global indices. Currently, India's weight has been limited due to higher promoter holdings.

"If you want liquidity in the market, you must increase the free float of shares rather than just look at a broad increase in percentage," a source told the paper.
The source also questioned the rationale behind the plan, given that the limit is 25 percent in most countries.

Tata Consultancy Services, HDFC Life and Avenue Supermarts are some of the large companies where promoters will have to sell some of their shares in the market.