Firms non-compliant with SEBI norms to face action

May 7th, 2012 - 10:32 pm ICT by IANS  

Chennai, May 7 (IANS) Capital market regulator Securities and Exchange Board of India (SEBI) Monday warned of action against companies not complying with its norms on public shareholdings even as it was looking into the suggestions on guidelines for firms raising capital.

“There are 181 companies which are not compliant with the SEBI norms on the public shareholding. By June 2013 private sector listed companies and by August 2013 public sector companies that are listed have to comply with our norms, failing which consequences would follow for non-compliance,” its chairman U.K. Sinha told reporters here.

As per SEBI norms, listed private companies should have a minimum of 25 percent public shareholding, while in the case of public sector listed companies the limit is 10 percent.

Not agreeing that the response to the two regulations - Institutional Placement Plan (IPP) and Offer for Sale (OFS) to raise capital was lukewarm, Sinha said: “So far only three issues have come one under IPP and two under OFS. It cannot be said the response is lukewarm as the procedures are less time consuming.”

He said SEBI is looking into suggestions on modifications on these two regulations.

Queried on the status of the initial public offering (IPO) norms for non-life insurers, Sinha said, “The discussion with the insurance regulator is on. There are some small issues that are to be sorted out.”

He said the regulator is concerned at slow growth rate of the mutual fund industry contrary to the expectations.

“In 2010-11 the net inflow of mutual fund was down by Rs.13,500 crore. During 2011-12 the net inflow to the mutual fund industry has increased by around Rs.700 crore to Rs.14,200 crore. However the number of portfolios went down in 2011-12,” Sinha said.

He said SEBI was consulting various parties on the ways to increase the mutual fund reach while agreeing that the net inflow to mutual fund sector in other parts of the globe also went down during the said period.

Replying in negative to a query whether SEBI was mapping the investor complaints against individual stock market intermediaries, Sinha urged investors not to give any blanket power of attorney in favour of the brokers.

“As long as the market is good there are no complaints. Complaints would arise against the intermediaries when the market is dull,” he added.

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