The Associated Chambers of Commerce and Industry of India (Assocham) has opposed the government proposal to hike public holdings in any listed companies to 25 per cent from existing level of 10 per cent in one go. It has instead suggested that it be done in a phased manner spread over a period of five years. In a representation submitted to the finance and corporate affairs ministries, the Assocham president Venugopal N Dhoot argued that amendments in the Securities Contracts (Regulation) Rules, 1957, should not be effected in hurried manner to hike the ceiling of public holdings in enlisted companies as it will create a cautious in capital market. Dhoot pointed out that the government wants to increase the public holdings in enlisted companies to 25 per cent from 10 per cent now by introducing the amendment in 1957 Act within a period of three months, which is too short to be complied with and create a resource generation problems for listed companies. It should, therefore, be avoided as much as possible and a minimum period of five years should be fixed to implement the move of the government in this direction. The Chamber has cited a recent study of market capitalised top 30 companies which indicates that only three of 30 companies have a public shareholding below 25 per cent if the holdings of Financial Institutions (FIs), banks and Foreign Institutional Investors (FIIs) are taken in public shareholdings. Only eight of these 30 companies have a public shareholding of 25 per cent if the holdings of FIs, banks and FIIs are not taken into public shareholding.If for any reason the public holding reduces below 25 per cent, the promoters, management and company may jointly and severally 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. The Chamber has also argued that there should be similar regulations applied for public holdings increase for listed companies in government and private sector. Besides, Assocham is also of the firm view that the power of stock exchanges to relax any of conditions for listing with the prior approval of Sebi in respect of a government company needs to be withdrawn. Likewise, the powers of Sebi to relax listing requirement of public companies should also be withdrawn.
