Sebi relaxes minimum public holding norms

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By:

ENS Economic Bureau

| Mumbai |


Published: May 15, 2020 3:14:39 am


The decision has been taken after receiving requests from listed entities and industry bodies as well as considering the prevailing business and market conditions, it said. (File Photo)

The Securities and Exchange Board of India (Sebi) on Thursday relaxed the 25 per cent minimum public shareholding norm and advised exchanges not to take penal action till August 2020 in case of non-compliance.

The Sebi move is aimed at easing such compliance rules amid the disruptions caused by the coronavirus pandemic. The decision has been taken after receiving requests from listed entities and industry bodies as well as considering the prevailing business and market conditions, it said.

In a circular, Sebi said it has decided to grant relaxation from applicability of minimum public shareholding (MPS) requirement. The rules have been relaxed for listed entities for whom the deadline to comply with MPS requirements falls between the period from March 1, 2020 to August 31, 2020. Under Sebi norms, listed entities are required to have at least 25 per cent public shareholding.

Stock exchanges have been asked to not take any penal action against such entities in case of non-compliance during the said period. Penal actions, if any, initiated by exchanges from March 1, 2020 till date for non-compliance of MPS requirements by such listed entities may be withdrawn, the regulator said.

As per the norms, exchanges can impose a fine of up to Rs 10,000 on companies for each day of non-compliance with MPS requirements. Besides, exchanges can intimate depositories to freeze the entire shareholding of the promoter and promoter group. This circular will come into force with immediate effect, it said.

Many public sector companies are yet to fulfill the 25 per cent minimum public shareholding norms, and have been seeking deadline extensions. In July 2019, Finance Minister Nirmala Sitharaman in her maiden Budget speech urged Sebi to consider increasing the minimum public holding in listed firms to 35 per cent from 25 per cent. However, Sebi board is yet to take a view on this proposal.

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