New Delhi, Feb 1 (UNI) The Government today proposed to amend the Securities Contracts (Regulation) Rules, 1957 (SCRR) for both initial and continuous listing requirements of companies in stock exchanges and make it madatory for a company to have 25 per cent public stake for initial and continued listing.
The Ministry of Finance in a statement said if for any reason, the public holding reduces below 25 per cent, the promoters, management and company may be jointly and severely be liable to bring the public holding to 25 per cent within three months, in the manner prescribed by SEBI, failing which appropriate enforcement action, including delisting, may be taken.
A large number of shares distributed among a large number of shareholders is essential for the sustenance of a continuous market for listed securities to provide liquidity to the investors and to discover fair prices.
The larger the number of shares and the number of shareholders, or the larger the public float, the less is the scope for price manipulation. In order to ensure this, the securities laws prescribe initial and continuous listing requirements.
MoF prposes that the standards for initial listing and continued listing may be prescribed in the SCR Rules and the standards for such listing may be uniform, as the objective is same.
Accordingly a public offer envisaged at initial listing will not be valid unless the public are actually allotted shares and the SCRR may speak in terms of allotment to public and not just public offer.
''As of now, the word 'public' is not defined. If 'public' means 'non-promoters' and includes FIs, FIIs, MFs, employees, NRIs/OCBs, private corporate bodies, etc, the floating stock would be insignificant. A view needs to be taken on this,'' the statement said.
The Ministry also plans to check any discrimination between a Government company and non-Government company.
''The powers of the stock exchange to relax any of the conditions of listing with the prior approval of SEBI in respect of a Government company needs to be withdrawn,'' MoF statement said.
Similarly, the powers of SEBI to relax listing requirements may be also withdrawn.
A discussion paper titled, 'Requirement of Public Holding for Listing' containing above proposals has been hosted on the website of Finance Ministry. The comments on these proposals are invited by 28th February, 2008.
UNI PBB AK AS1924