The Securities and Exchange Board of India has decided to ask listed companies to have a minimum 25 per cent non-promoter shareholding. So companies that fall below this threshold will have to raise their non-promoter holding.

However, companies will be given three years to comply with the requirement. The new requirement will be a part of the continuous listing agreement that companies have to comply with.

Sebi chairman G N Bajpai, in an exclusive interview on Monday with Business Standard, confirmed that Sebi was pushing the new requirement.

Asked specifically whether Sebi had already introduced the new regulation, Bajpai could not give a timeframe.

Several big companies have a non-promoter shareholding of under 25 per cent. The new requirement will, therefore, have major implications for them because they will have to expand their non-promoter shareholding, through a public issue or private placement to institutional investors.

Raising the bar Sample list of companies with a non-promoter shareholding of under 25%
Public companies
Neyveli Lignite	6.44
Nalco	12.85
SAIL	14.18
ONGC	15.89
IOC	17.97
SCI	19.88
PNB	20.00
Private companies
Wipro	16.10
Dabur	21.66
iGate Global Solutions	11.65
Jindal Polyester	13.83
(in percent)

Bajpai, however, said Sebi would not monitor companies to see whether they had complied with the requirement. "They'll have to comply," he said.

Bajpai also disclosed that the concept paper for the introduction of Indian Depository Receipts was pending with the law ministry for approval, after which Sebi would put the finishing touches before releasing it.

Bajpai said this would pave the way for overseas companies to list here and make India a "regional financial centre", something that has been a dream for him for some time.

Sebi would also be shortly putting in place a scheme for margin trading, Bajpai indicated. This has been hanging fire for a long time now and is needed in order to make physical settlement in the derivatives segment a reality.

Asked about the proposal to set up a contrarian fund, he said such a fund could be used to stabilise the equity market, much like the Reserve Bank of India's intervention in the foreign exchange market.

However, Sebi does not propose to be associated with the contrarian fund in any way.

Last month Sebi had proposed the idea of a contrarian fund to the government in order to counter the overwhelming force of the foreign institutional investors, which are driving the current rally. Bajpai said it was merely an idea and it was up to the government to implement it.

He, however, clarified that it was more in the perspective of a risk management measure that it had been thought of.

The contrarian fund would be managed by an independent group of market savvy persons and it would be entirely up to them when to intervene in the market.

Bajpai said the idea had emerged out of the issues raised by both the media as well as Sebi officials over the poor participation of domestic financial institutions in the equity market.

"The FIIs, once they find opportunities for higher growth elsewhere, will go there and that means they will pull out from the market here," Bajpai pointed out.

The market regulator made it clear that he was only concerned with the sharpness in the rise of the Sensex rather than the actual movement. It has taken a mere 25 days for the index to rise from 5,000 to 6,000.

On initial public offerings and the massive oversubscription that has been the hallmark of recent IPOs, Bajpai said once the supply speeded up, the oversubscription would come down.

This would also be the way to remove the grey market. "There is a lot of money chasing too few issues," he pointed out.