Amendment to public shareholding requirement


The Ministry of Finance on Friday amended the Minimum Public Shareholding norm for listed companies. The Finance Minister, Mr. Pranab Mukherjee, earlier in his budget speech for 2009-2010, had proposed to raise the threshold for Non-Promoter, Public Share-holding for all listed companies. The amendment has arrived as The Ministry believes that “ A dispersed shareholding structure is essential for the sustenance of a continuous market for listed securities to provide liquidity to the investors and to discover fair prices. Further, the larger the number of shareholders, the less is the scope for price manipulation.”
The Salient features of the amendments are:
  1. The Minimum threshold level of public holding will be 25% for all listed companies. 
  1. Existing companies less than 25% public shareholding will have to reach a minimum level of 25% public shareholding by an annual addition of not less than 5% to public holding. 
  1. For new listing, a company with post-issue capital (at offer price) of more than Rs. 4000 Crore, may be allowed to go public with 10% public shareholding and later complying with 25% public share-holding norm by adding at least 5% public shareholding per annum. 
  1. Every listed company shall maintain public shareholding of at least 25%, and if it falls below that level anytime then company shall bring the public shareholding to 25% Level within a maximum period of 12 months.