Budget 2019 update: Good news! Your minimum public shareholding may be hiked to 35%
Budget 2019: Sebi's current guidelines allow only 25% minimum shareholding by non-promoters (public).
Some good news has come for investors! Finance Minister Nirmala Sitharaman has stated that she has asked market regulator to increase minimum public shareholding limit to 35% while presenting Union Budget 2019 on Friday. Currently, Sebi's guideline allows only 25% minimum shareholding by non-promoters (public). What is interesting to note is that, 35% threshold limit issue has been hitting the headlines since the last two years. Looks like, finally retail investors will be able to buy more shares in their favorite stock.
Sitharaman said, "It's right time to consider increasing minimum public shareholding in the listed companies, I have asked SEBI to consider raising the current threshold of 25% to 35%."
Sebi's minimum public shareholding (MSP) was introduced back in 2010, with only 25% holding limit in listed equity shares on benchmark indices Sensex and Nifty.
If the 25% limit was exhausted, the investors are supposed to sell their shares in order to maintain the criteria.
"The proposed announcement of the increase in minimum shareholding threshold from 25% to 35% is a move to increase public participation in listed entities thereby fortifying the fundamentals of Governance . One would need to evaluate once the fine print is available ( as the FM mentioned that SEBI will be issuing the requisite circulars) as there would be some clarifications expected including on grandfathering of existing situations , movement to the desired threshold," Anil Talreja, Partner, Deloitte India revealed.
At present, on Sensex alone there are some 4,13,57,794 registered investors. While, number of companies traded are 2,206. Also, some 110 companies on the BSE 500 index at present have a public float of below 30%. Notably, of these 25 companies have public shareholding less than 25%.
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