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25% Public Holding to Ensure Healthier Market


In the wake of the Eurozone crisis on 4 June 2010 new policy norms for listing companies were announced by the Indian authorities. According to the new policy it would be mandatory for companies listed on the bourses to have 25 per cent of its holdings entrusted with the public.

Oct 13, 2010 14:00 IST


In the wake of the Eurozone crisis on 4 June 2010 new policy norms for listing companies were announced by the Indian authorities. According to the new policy it would be mandatory for companies listed on the bourses to have 25 per cent of its holdings entrusted with the public. The public holding was raised to 25 per cent from the earlier figure of 10 per cent. The norm would not only ensure a healthy market but would also facilitate India's government public sector disinvestment programme. There would be greater scope for investors to participate in equity offerings of both public and private sector companies. On the other hand companies would be able to sell their shares gradually without fearing depressing share prices. The new norm struck a fine balance between the companies and the public. The policy is expected to yeild medium and long term benefit. However in the short term, the market might witness rapid transfer of capital from the secondary to the primary market.