SEBI, is thinking to increase minimum public shareholding requirement from the current 25% to 30 or 35%. This is to increase the liquidity in the market and decrease the share price manipulations.

As per Pranav Haldea, managing director, PRIME Database, “A wider ownership will improve liquidity and reduce the scope for price manipulation, besides bettering corporate governance standards.”

Moreover, at present 110 companies on the BSE 500 index are having public float of less than 30%.  Out of these, 25 companies have public float of less than the currently required 25%.

So, if SEBI increases the mandatory public float than, as per an estimate these 110 companies will need to divest shares of approx Rs.1.35 lakh crore at current prices.

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