Historically speaking, India has been a promoter-driven market and increasing the minimum level of public shareholding of listed companies from 25 per cent to 35 per cent threshold will ensure wider ownership through institutional investors, more market depth, better price discovery and hopefully will enhance the corporate governance standards.
This will potentially also be a concern for several listed companies with promoter shareholding at around 75 per cent, for e.g. MNCs. Promoters of such companies may want to explore options to delist such companies, unless they are fine with increasing the public shareholding by another 10 per cent. At 65 per cent promoter shareholding, it will also be an additional hurdle to be crossed by a promoter, if a promoter was to attempt delisting i.e. reaching 90 per cent through the book building route from 65 per cent, than from 75 per cent.
The number of “OFS through stock exchange mechanism” will perhaps increase to dilute the promoter shareholding from 75 per cent to 65 per cent, as it is one of the fastest and cheapest ways to dilute promoters shareholding, as compared to other modes available to increase the public shareholding.
On relaxed KYC norms for FPIs
Hopefully, this will give some relief to those FPIs who were otherwise sceptical in sharing some of their KYC details and were therefore shying away from the Indian securities markets. Devil will, however, be in the details of such relaxed norms.
On recapitalisation of PSU banks
Capital is definitely core to banks for expanding credit, earning interest and growing their balance sheets, so that they can drive economic activities. The recapitalisation was needed and is a timely impetus. However, some radical changes like relaxing the statutory requirement of government to hold not less than 51 per cent of the paid up capital in PSU banks should have been considered.
(The writer is Partner, Shardul Amarchand Mangaldas & Co. The views expressed are personal)