A majority of companies that failed to comply with the minimum public shareholding norms by the stipulated deadline of June 3 have now swung into action to meet the regulatory requirements to avoid stringent action likely to be taken by the Securities & Exchange Board of India (Sebi).
According to stock exchange disclosures, promoters of many such companies have started off-loading their shares in small tranches in the open market or have decided to go ahead with a bonus or rights issuance. Incidentally, a few entities are also mulling the option of delisting, perhaps encouraged by the recent success of some of the smaller companies.
Tata Sons, for instance, has sold shares of Tata Teleservices (Maharashtra) on at least three occasions in June. The promoter stake has marginally reduced to 77.21% from 77.72% between March 31 and June 3, 2013. The telecom company had launched an offer for sale (OFS) on May 30 but failed to attract bidders.
Similarly, the promoters of Batliboi, Brady & Morris Engineering, Elantas Beck India, Foseco India and Tulive Developers have also been off-loading their shares in the open market at regular intervals. Merchant bankers say that selling shares in the open market is the easiest manner in which promoters can comply with the norms since it would not require any approval from shareholders or the regulator.
On June 4, Sebi released a list of 72 actively-traded and 33 suspended companies wherein promoters failed to bring down their stake to 75%. The regulator barred promoters of all such entities from accessing the market while freezing their voting rights and corporate benefits like dividends and bonus.
A few companies have also decided to use the option of bonus shares or rights issue only for the public shareholders in order to bring down the promoter holding to 75%. In August last year, Sebi allowed companies to use these two avenues to comply with the public shareholding requirements.
Stock exchange disclosures show that entities like Dalal Street Investments, Kovalam Investment, Nagarjuna Agrichem, Parshwanath Corporation and Plethico Pharmaceuticals, among others have either opted for bonus shares or rights issue to bring down promoter holding.
Meanwhile, around a dozen companies among the actively-traded entities named in the Sebi order have either initiated the delisting process or have already received shareholders? approval for getting their shares delisted from the bourses.
While Jolly Board, Fairfield Atlas and Kampani Consultants have successfully completed their delisting offer, companies like Titan Trading, Suashish Diamonds, Miven Machine Tools, Fresenius Kabi Oncology and Vishnu Sugar Mills have initiated the process to delist instead of bringing down the promoter holding.
