The new Companies Act promising more shareholder democracy and tighter governance norms for corporates is likely to be enacted this year, Corporate Affairs Secretary R Bandyopadhyay said.
“We are hopeful that the committee (parliamentary standing committee) will be giving its reports very quickly… Maybe in the monsoon session… and the ministry will take another two to three months.
Just five days after mandating all listed companies to have a minimum 25 per cent public float, the government said indicated it was open to a review of the new rules.
“If there is need for any modification, correction, amendment, or may be amplification, it will be done,” Finance Secretary Ashok Chawla told reporters on the sidelines of a function by the Confederation of Indian Industry.
The government’s decision to raise the minimum threshold of public holding in listed companies is good news for the investment banking fraternity.
According to industry sources, the finance ministry diktat would provide investment bankers enough room to negotiate on the fee structure. A substantial change, however, from the current structure is not what bankers are betting on.
The Finance Ministry has sought to soothe fears expressed in certain quarters that its directive for a minimum 25 per cent public float for listed companies could result in a flood of share offers in the market.
A senior Finance Ministry official also said that the move will not dry up resources for huge government borrowings this fiscal.
The government’s move to enforce a minimum 25 per cent public holding in all listed firms should be put on hold for another three months, as a lot of “grey areas” need to be cleared, said CII President Hari S Bhartia.
“Large cap firms, in fact all the companies, should definitely be given more time. The government can give three months’ time. The policy announcement of June 4 can be treated as the concept paper on which views of different stakeholders can be sought,” Bhartia said.
The government’s move to make it mandatory for listed companies to raise public stakeholding to 25 % will require additional capital of Rs 58,500 crore from the market this fiscal, but few investors will have the appetite for it, a report said.
“With incremental flows strongly dependent on the global macro (situation), there could be few takers for the additional capital of Rs 58,500 crore on offer this fiscal…,” said the report released by financial services firm Religare.
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