The Securities and Exchange Board of India is likely to allow select companies to reduce the minimum non-promoter holding to 10 per cent. The issue is slated for discussion at a scheduled Sebi board meeting to be held later this month.
Though Sebi officials were tightlipped about the issue, sources close to the regulator said the 10 per cent holding could be allowed only for those companies which followed governance norms as well as achieved a minimum level of liquidity and market cap.
Sources said the minimum non-promoter holding in a company could be held at two levels -- 25 per cent and 10 per cent -- with a switching mechanism between the two.
Earlier this year, it was notified in the official gazette of Sebi that the minimum non-promoter holding would be maintained at 25 per cent but the listing agreement was never amended to reflect this.
This confused many companies as there was no clear direction from Sebi on whether to adhere to the original norms or switch to the new norms.
At present, a minimum 10 per cent float is allowed for those companies with a minimum issue size of Rs 100 crore (Rs 1 billion) and Rs 1,000 crore (Rs 10 billion) market capitalisation.
Sources said it had been suggested at various times that promoters should be able to switch between the two levels -- 25 per cent and 10 per cent.
This will, however, be possible after the capital markets watchdog makes some adjustments to the secondary market listing norms.
The Sebi board meeting will also decide whether an open offer is justified for raising stakes beyond 55 per cent.
The gazette notification had made it mandatory for promoters with a 55 per cent stake to go in for an open offer if they wanted to increase their stake up to 75 per cent.
Taking the creeping acquisition route was disallowed, as were other market-related routes such as preferential allotments.
Corporate governance is the key
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Minimum non-promoter holding in a firm can be held at two levels -- 25% and 10%
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Sebi to decide whether an open offer is justified for raising stakes beyond 55%
- There can be a return to the previous regime of unrestricted creeping acquisition to 75%
