Public holding in companies to be increased in phased manner

NEW DELHI: The government will allow companies, having more than 75 per cent promoters holding, to increase the public stake in a phased manner and not at one go.

"It (increasing public holding in the companies where promoters' stake is over 75 per cent) would be in a phased manner," an official source told PTI.

The draft in this respect will be released soon for public comments and the framework is expected to be out by December-end, he added.

"The process (to draft rules) has started ... The framework would be ready by this year-end," the source said.

The government has to amend the Securities Contracts (Regulation) Rules (SCRR) for the purpose, he added.

And once the framework is out, a slew of follow on public offers (FPOs) is expected to hit the market as about 180 companies have less than 25 per cent public holding.

Finance Minister Pranab Mukherjee in his Budget speech for 2009-10 had said that the average public float in Indian listed companies is less than 15 per cent. Deep non- manipulable markets require larger and diversified public shareholdings.