The Securities and Exchange Board of India (Sebi) has issued a stern warning to promoters of companies that are yet to comply with the minimum public shareholding norms.
Sebi chairman UK Sinha on Friday said companies should focus on complying with the regulations rather than lobbying for a postponement of the deadline next year.
?India Inc is hoping that Sebi and the government will extend the deadline. I have the confirmation from the finance ministry that no such thing is being contemplated,? said Sinha, speaking at a capital market seminar organised by Ficci.
?Minimum public shareholding is not unique to India. If companies think they can get away with violating this norm, let me tell you the consequences will be very serious,? warned Sinha.
He, however, said that the regulator will be ?conscious of the fact that interest of the minority shareholders in such companies are not compromised?.
According to the minimum public shareholding norms, promoters of private and public listed companies need to bring down their stake to 75% and 90%, respectively. The deadline for complying with this requirement has been fixed as June 2013 for private companies and August 2013 for public sector entities.
The Sebi chief also clarified that the government has given an assurance that all non-compliant public-sector entities will comply with the norms before the deadline.
?We have the assurance that all non-compliant PSUs will become compliant within the timeline. It is time to start thinking of compliance with minimum public shareholding norms,? he said.
Sinha said India Inc needs to improve on the corporate governance scale if it wishes to attract long-term institutional money on a sustained basis. On the issue of securities transaction tax (STT), Sinha said Sebi has told the government that statutory costs account for the biggest portion of total costs in India and need to be looked into.
On mutual funds, the Sebi chairman said that the regulator has tried to strike a balance between attracting investors and helping the industry. He stressed on the point that the fund houses need to go beyond the top 15 cities to get sustainable and long-term business.
