Listed Companies To Have Minimum 25% Public Shareholding

by khalid on 09/06/2010 · 0 comments

The government has told all listed companies to have a minimum 25% public shareholding. Companies with less than the stipulated holding, will have to step up at least 5% a year. To implement the above guidelines, four public sector banks, including Central Bank of India, Bank of Maharashtra (BoM), United Bank of India (UBI) and Indian Bank, have to sell shares to the public yet again this fiscal year to step up their public holding to 25%. It is mandatory for these banks to hit the equity market this year. For UBI, which was listed about three months back, it may not be preferable to enter the market within a very short time. But, the changed guidelines has forced its management to review the situation.

UBI’s total public holding is just about 15.80% and it will need to go the distance within the next three years. Banks may either issue a follow-on public offer (FPO) or come up with rights issue in which government declines to participate.

Public shareholding at Central Bank of India was 19.8%, 20% in Indian Bank and 23.2% in Bank of Maharashtra (BoM) as on March 31, 2010. The government holds the balance share in these banks.

Big banks like State Bank of India, Punjab National Bank, Bank of India, Bank of Baroda and Union Bank of India typically have a well diversified shareholding structure ranging between 35-46% public holding. Canara Bank is an exception with 26.83% public holding, which is just a shade above the stipulated norm.

Private players like ICICI Bank, HDFC Bank or Axis Bank, too, have a well diversified equity holding. All these entities have public holding above 50%. While ICICI Bank has 71.7% public holding, Yes Bank has 72.8%. HDFC, Axis Bank and Kotak Mahindra have a holding structure in the range of 51-59% as on 31March 2010.

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