Listed companies required to maintain 25 per cent public holding

The government has made amendments to the Securities Contracts (Regulation) Rules raising the minimum floor limit for public investment  has been raised 25 per cent.for all listed companies.

In his Budget speech for 2009-10, the finance minister had proposed raising the threshold for non- promoter, public shareholding for all listed companies.

Existing listed companies with less than 25 per cent public holding have to reach the  minimum 25 per cent level through an annual  addition  of  at least 5 per cent  public holding.

For new listings, if the post issue capital of the company calculated at offer price is more than Rs4,000 crore, the company may be allowed to go public with 10 per cent public shareholding and comply with the 25 per cent public shareholding requirement by increasing its public shareholding by at least 5 per cent every year.

Companies whose draft offer document is pending with Securities and Exchange Board of India on or before these amendments, will have to comply with the 25-per cent public shareholding requirement by increasing their public holdings by at least 5 per cent per annum, irrespective of the amount of post issue capital of the company calculated at the offer price. 

A company may increase its public shareholding by under 5 per cent in a year provide the lowered increase brings its public shareholding to the minimum yjreshold of of 25 per cent in that year.