| Sebi could take further action against errant promoters |
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Mumbai, 6 June Market regulator Securities and Exchange Board of India (Sebi) will consider further action against companies that have failed to comply with the minimum public shareholding criteria after they submit their replies to the showcause notice. "It is an interim order. People have been asked to (reply to the) show cause (notice). Going by the merits of the show cause, individual action will be taken on a case- to- case basis," said Sebi Chairman UK Sinha today on the sidelines of the Skoch Summit. On Tuesday, Sebi had passed an order against promoter individuals and entities of these 105 companies for failing to reduce their shareholding to at least 75 per cent. While imposing a partial market ban and freezing aportion of their voting rights, the regulator asked them to submit replies within 21 days. Levy of monetary penalty, initiating criminal proceedings, moving the scrip to trade to trade category and exclusion from the futures and options segment are some of the actions that the regulator is mulling against the violators. "In spite of three years of time being given, while a large number of corporates followed our guideline, more than 100 of them, for some reason or the other, couldn't do that," said Sinha. Adani Ports and SEZ, Videocon Industries, Tata Tele ( Maha), Essar Ports, Bombay Rayon and Omaxe are among the prominent names that are yet to comply with Sebi's shareholding requirement norm. "Very reluctantly, Sebi had to take action against them," said Sinha, emphasising that high percentage of public shareholding and faith in diversified ownership is important. "We believe, if these things are implemented and followed by everyone in the country, it will generate a lot of trust in the market," said the Sebi chief. After the Sebi rap, many companies have swung into action to bring down the promoter holding to 75 per cent. The deadline for private firms to achieve 25 per cent public holding ended on June 3. Meanwhile, public sector undertakings ( PSUs) have time till August 9 to pare the government holding to at least 90 per cent. About a dozen PSUs currently have government holding in excess of 90 per cent. However, these companies are yet to announce any concrete stake sale plans. "I have been assured by the government that they will follow the deadline," said Sinha. He added that corporate governance and investor education will be the next big focus areas for Sebi. He said the market regulator has already come out with a discussion paper on corporate governance and related- party transactions. Sinha further said all the regulators — Sebi, Reserve Bank of India and the Insurance Regulatory and Development Authority — are working closely towards spreading investor education in the country. "Investor education is an area where we have to cover a lot of ground. Time has come for a combined effort. Here also, all regulators have come together to form a combined national strategy. Going forward, we will have a strategy in place so that consumers in the financial market are given aunified message and information about the markets," said Sinha. Action on a case- by- case basis after entities give replies "It is an interim order. People have been asked to ( reply to the) show cause ( notice). Going by the merits of the show cause, individual action will be taken on a casetocase basis" UK SINHA Chairman, Sebi |On Tuesday, Sebi had passed an order against promoter individuals and entities of 105 companies for failing to reduce their shareholding to at least 75 per cent |While imposing a partial market ban and freezing a portion of their voting rights, the regulator asked them to submit replies within 21 days SEBI'S PLAN OF ACTION |
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Company Secretary, Chennai
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