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Should the government review 25% public float norms for listed companies?

Created by : Suganthi Srinivasan, Accounts Manager, Verizon Communications  | 06 23 2010 07:43:17 +0000
Industry : Equity Research/AnalyticsFunctional Area : India(Markets)
Keywords : government review listed companies 25% public float norms
Activity:  180 views;  last activity : 07 06 2010 20:18:09 +0000

The department of disinvestment has sought a review of the recent norms that make it mandatory for all listed firms to have at least 25% public float, arguing it could affect the divestment programme and impact the valuation of public sector firms.

http://1.bp.blogspot.com/_okqHUsjkHP4/SvkB9bAY1SI/AAAAAAAAABQ/WkEpJDzPoXY/s400/SME1.jpg

It has has written to the finance ministry with its comments about the pros and cons of the new norms. The listing norms, issued earlier this month, have stipulated that companies seeking fresh listing with a public issue of more than Rs 4,000 crore can begin with only a 10% offer to the public. Those firms that are already in the process of listing and have already filed their draft prospectus can also go public with 10% public shareholding. But both would have to increase their public float by 5% annually till they achieve at least 25% public shareholding.

So users, do you think the government should review 25% public float norms for listed companies?

  
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I think the government should review. Once they are listed, they will have to raise public shareholding to 25%. This would be almost like forcing them to launch public issues. Firms may also be forced to make public offers even if the market conditions are not conducive.

No doubt these norms are a good principle but they have to be implemented in an orderly fashion to ensure that the market does not get destabilised. An artificial time limit of three to four years is not sufficient. The government may also have to make exemptions for some sectors or companies.
By Suganthi Srinivasan, Accounts Manager, Verizon Communications  06 23 2010 07:43:17 +0000
 
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Yes Ms. Suganthi, the govt should review 25% public float or it should be in a phased manner. 
By NATTERAJA R. ARIKRISHNAN, GM-Projects, Bentec Electricals & Electronics Pvt. Ltd  | 06 24 2010 19:23:46 +0000
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yes, because it is not justice for listed companies. Although it can be applicable with new listings but again it may be dangerous also/.........
By Vipin Bhasin, Private Equity/Hedge Fund/VC-Manager, Indian Investment Co.  | 06 24 2010 06:18:14 +0000
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I think no review is required in floating the mininimum 25% in market.

 

Justice to whom Vipin, Listed Companies or Investors ?

I favour Investor.
By Jyoti CHETANI, Freelancer, Equity Research/Analytics  | 06 25 2010 05:17:34 +0000
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If I say, 'No' that will do no justice to the listed cos.

-- 25 % in a sigle go is perhaps too much

-- that will bring excess scrips in the Market, whic may not be good
By ASOKE KUSARI, Domestic Private Banking-Executive/Manager, A large leading PSU Bank - India  | 06 23 2010 12:58:20 +0000
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The department of disinvestment has sought a review of the recent norms that make it mandatory for all listed firms to have at least 25% public float, arguing it could affect the divestment programme and impact the valuation of public sector...
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