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Business News/ Budget 2019 / News/  Budget 2019: Listed companies will need to maintain 35% of public float
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Budget 2019: Listed companies will need to maintain 35% of public float

'We will ask Sebi to mull a raise in MPS for listed companies from 25% to 35%,' says Nirmala Sitharaman during budget speech
  • While this move will ensure more public investing in equity markets it will also force corporates to go on a public offering spree
  • The first time the listed companies were required to have 25% of MPS was in 2013Premium
    The first time the listed companies were required to have 25% of MPS was in 2013

    Mumbai: Going forward, listed companies may need to maintain 35% of minimum public shareholding (MPS), according to the statement by the finance minister in her maiden union budget.

    "We will ask Sebi to mull a rise in MPS for listed companies from 25% to 35%," said Nirmala Sitharaman, union finance minister.

    The announcement was followed by the market falling by 135 points at 11:51 am. While this move will ensure more public investing in equity markets, it will also force corporates to go on a public offering spree. This would also require the market regulator to change several regulations pertaining to public offerings. It is unclear what is the timeline the companies would need to meet, these would need to specified by Sebi in the coming months.

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    This move would enhance liquidity and public say in the listed firms.

    The first time the listed companies were required to have 25% of MPS was in 2013. It was raised from 10% to 25%. Sebi had created two additional avenues for raising public shareholding -- offer for sale and institutional placement. It was a major challenge for listed firms and Sebi had penalised over 100 companies for not adhering to a 25% MPS.

    The public sector undertakings were given a deadline of August 2017, which was further extended to 2018, to have a 25% minimum public float. Majority of public sector firms are yet to meet the 25% MPS requirement due to lack of price discovery.

    To ensure parity between public and private listed companies, government also said that it will ensure that all PSUs will ensure that have a minimum public float of 25%.





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    ABOUT THE AUTHOR
    Jayshree P Upadhyay
    Jayshree heads a team of reporters focussing on legal, regulatory, investigative stories. She has worked for over a decade, reporting on financial scams, legal stories and the intersection of corporate and regulatory issues. She is based in Mumbai and has previously worked with Business Standard, Mint, The Morning Context and Bloomberg TV India.
    Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
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    Published: 05 Jul 2019, 12:11 PM IST
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