The Securities and Exchange Board of India (Sebi) is expected to relax norms related to offer for sale (OFS) and other avenues that are currently available to listed companies to dilute promoter stake and comply with the minimum public shareholding norms.
Among others, Sebi is expected to allow institutional investors to bid for shares in an OFS without paying any up-front margin. Such bidders, however, will not be allowed to withdraw or modify their bids. The new norms will most likely be announced on Friday when the board of the capital market regulator meets in Chennai.
“We will perhaps go for some more simplification rather than any other routes,” said Sebi chairman UK Sinha on Wednesday. Apart from OFS, institutional placement programme (IPP), follow-on public offer (FPO), rights and bonus are the ways in which promoters can dilute their stake to comply with public shareholding norms.
According to the minimum public shareholding norms, private sector companies need to attain a minimum public holding of 25% by June this year, while a threshold of 10% is required by PSUs by August. Incidentally, promoters of nearly 190 companies are yet to bring down their shareholding to desired level to meet the guidelines.
According to persons privy to the development, the regulator will also direct stock exchanges to disseminate data related to the indicative price and the quantum of bids so as to provide more clarity to all potential bidders.
Currently, information related to the quantum of bids is updated on a regular basis, which is available on the websites of BSE and NSE. The indicative price, however, is shown only at the fag end of the bidding session.
While the regulator will relax norms related to OFS and other avenues, it will also discuss measures to be taken against the non-compliant entities. Market experts are of the view that barring a few companies, most listed entities will bring down their promoter holding within the deadline to comply with the regulations.
The regulator is also likely to discuss the final norms for the proposed ‘mandatory safety net mechanism’ in initial public offerings (IPOs) on which it floated a discussion paper in September and had sought public comments till October.
On the table
* Sebi is expected to allow institutional investors to bid for shares in an OFS without paying any up-front margin
* Such bidders, however, will not be allowed to withdraw or modify their bids
* Relaxation in norms to help companies comply