Govt may give listed PSUs another year to comply with minimum public shareholding rule: Sources

The Finance Ministry will extend by one year the deadline for public sector undertakings (PSUs) to comply with the minimum public shareholding (MPS) rule of 25 percent, sources told Moneycontrol. The  Finance Ministry is expected to issue a gazette notification to this effect soon. More than a dozen companies will be benefit from this extension.

SEBI regulations require that at least 25 percent of the equity of listed companies should be held by non-promoters. Public sector firms were given time till August 2017 to comply with this rule.

However, by the end of March, the government held more than 75 percent stake in public sector banks (PSBs) such as United Bank of India, Indian Bank, Bank of Maharashtra, Central Bank of India, Punjab and Sind Bank, Indian Overseas Bank and UCO Bank.

In PSUs such as United Bank, Metals and Minerals Trading Corporation of India (MMTC), Neyveli Lignite Corporation (NLC) the government stake is nearly 85.23 percent, 89.93 percent and 89.33 percent, respectively, which is way over the threshold prescribed by SEBI.

To comply with SEBI regulations, the government diluted 5 percent stake in Rashtriya Chemicals & Fertilizers (RCF) via offer for sale (OFS) on Friday. Earlier it held a stake of 80 percent in the company.

The government had stipulated the 25 percent MPS norm in listed state-run companies in 2014, to promote a wider investor base, and boost the government’s plan to raise funds from disinvestment.

Earlier the mandate was that listed PSUs were to have at least a 10 percent public holding and listed non-PSUs were asked in June 2010 to have at least a 25 percent public shareholding within three years.

In a press conference this month, SEBI chairman Ajay Tyagi had confirmed that the department of investment and public asset management (DIPAM) had argued that the August 2017 deadline to bring down the government holding in PSUs won't suffice.

"However, extension of the deadline can't be done at Sebi's level. The issue has been referred to the Finance Ministry, who will take a view on that. The deadline is not in abeyance. The ministry needs to take a view on this," Tyagi said.