Mutual Fund News

SEBI Proposes Relaxed Delisting Norms for PSUs with 90% Govt Holding

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The Securities and Exchange Board of India (SEBI) has proposed easing the delisting process for public sector undertakings (PSUs) where the government holds more than 90%. In a recent consultation paper, SEBI suggested such PSUs could be exempted from adhering to the mandatory 25% minimum public shareholding norm.

It also proposed removing the requirement for a two-thirds majority shareholder approval for delisting. Delisting in these cases may follow a fixed price mechanism, set at a minimum 15% premium over the floor price, regardless of trading frequency. SEBI noted that several PSUs, despite lacking future viability due to obsolete products or government asset sale decisions, may trade at elevated prices due to investor trust in government backing.

The regulator warned that high public sentiment could result in an inflated floor price, increasing fiscal burden on the exchequer. The proposal aims to create a pragmatic route for PSU delisting.

Companies Barred from Claiming Tax Deductions on Regulatory Settlements

The Central Board of Direct Taxes (CBDT) has ruled that expenses incurred in settling regulatory violations under key financial and competition laws cannot be claimed as tax deductions. Effective from April 23, the notification clarifies that payments under the SEBI Act, Securities Contracts Regulation Act, Depositories Act, and Competition Act will not qualify as business expenditure under Section 37 of the Income-tax Act.

This means that fines, penalties, and settlement amounts related to these laws will no longer reduce a company's taxable income. Legal expert Abhishek Rastogi commented, "The government is sending a strong message that noncompliance will carry financial consequences-not just in fines but also in tax treatment."