This proposal, whereby the minimum public share level in listed companies is increased to 35 percent, is aimed at increasing liquidity on the stock markets.
The securities and exchange board of India (Sebi).
New Delhi: The government has asked market supervisor SEBI to look at raising the minimum public equity level in listed companies to 35 percent of the current 25 percent, said Finance Minister Nirmala Sitharaman Friday.
Sitharaman presented the EU budget 2019-20 in parliament and said: "We have asked SEBI (Securities and Exchange Board of India) to investigate how to increase the minimum public participation to 35 percent of the current 25 percent. " Once the task has been completed, SEBI must provide companies with a timetable.
This proposal is aimed at increasing liquidity on the stock markets and reducing the manipulation of stock prices. Although the Indian market is largely driven by promoters, a mandatory increase in public ownership will help to deepen the stock markets.
At the same time, such a move will help tighter corporate governance, which has come to light as shown by many recent cases. Because disclosures are mandatory, such a move will also help protect investors and improve corporate governance.
Moreover, increasing the minimum public participation will lead to more liquidity and to close the ways for price manipulation.
On the other hand, such a move will affect the public sector banks (PSB & # 39; s), in many of which the government shareholding is even higher than the current 75 percent limit of SEBI. Repeated recapitalization of PSB's in recent times has increased the government's commitment to state-owned companies.
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