MUMBAI: It is time to take a look at the concept of ‘promoters’ prevalent in India since long, against the globally prevalent practice of ‘controlling shareholders’, Securities and Exchange Board of India (SEBI) chairman Ajay Tyagi said while speaking at FICCI’s Capital Market Conference here on Thursday.
“Keeping in mind changing realities of the global and Indian markets, we are examining the relevance of the concept of promoter in today’s times, along with whether any changes to SEBI regulations are warranted in this regard,” Tyagi said.
This is significant given some of the issues that have arisen out of promoters controlling companies with low stake, pledged shares, governance related to group companies, etc.
In India, majority of companies are promoter-driven, identified with families and names; and among the listed companies, experts point out the exceptions are Larsen & Toubro and ITC. “They may be trying to bring in a threshold for control. It is easier to identify, easier to regulate,” said a practising company secretary.
The SEBI chairman also said that the regulator would soon take a view on reducing the timelines for rights issues based on a consultative paper brought out on the subject. Rights issues, he said, have recently seemed to have picked up. Reducing the timeline of rights issues to around 31 days has been suggested and SEBI has already brought down the public issue listing time from T+6 days to T+3 days.
Rights issues currently take 55-58 days, inordinately long given the fact that it is issued to existing shareholders. The rights issues of Vodafone Idea and Bharti Airtel were the significant ones, given that rights issues were not a favoured route, mainly due to the time it takes to complete and list the rights shares.
Tyagi reiterated the SEBI stance that there is no provision for mutual funds to get into standstill agreement with promoters who are not able to fulfill the repayment schedule, that they will not sell their shares. SEBI had earlier issued notices to fund houses on the issue.