SEBI Frames Guidelines To Monitor Infra Institutions’ Shareholding

SEBI Frames Guidelines To Monitor Infra Institutions’ Shareholding

It will be effective from 12 January, which is 90 days after the circular's issuance

The Securities and Exchange Board of India (SEBI) has introduced a framework to monitor shareholding limits, public shareholding requirements, and the ‘fit & proper’ criteria for Market Infrastructure Institutions (MIls), which include stock exchanges, clearing corporations and depositories.

It is applicable to listed and unlisted MIIs and requires them to disclose the shareholding patterns quarterly on their websites as per the SEBI Listing Obligations and Disclosure Requirements Regulations, 2015.

The circular stated that MIIs must appoint a non-associated Designated Depository (DD) to monitor compliance with shareholding limits.

The other depository would act as its DD and overseer breaches of the threshold limit of 5 percent or 15 percent as applicable under SECC Regulations, 2018 and D&P Regulations 2018, respectively, and act accordingly.

The markets regulator added, "The DD shall monitor and inform the MII and stock exchange on which its shares are listed (in case of listed MII), as and when the threshold limit of combined holding of 49 percent of all persons' resident outside India (directly or indirectly, either individually or together with persons acting in concert) in the paid-up equity share capital of an MII is breached and take action.”

It directed the stock exchanges to ensure that Trading Members (TMs), their associates, and agents do not collectively hold more than 49 percent equity. Holdings exceeding 45 per person would require prior approval for further purchase.

SEBI advised the corporations to maintain 51 percent ownership by stock exchanges, with no exchange holding over 15 percent in multiple CCs.

Similarly, all shareholders with 2 percent or more equity must meet the fit and proper criteria. In case of breach, the DD would freeze excess shares, disable voting rights, and transfer dividends from excess holdings to Investor Protection Funds (IPF) or Settlement Guarantee Funds (SGF).

The circular added that divestment of excess shareholding in a listed MII beyond the specified limit would be through a special window provided by the stock exchange where the shares of MII were listed.

However, any excess shareholding in an unlisted MII would be divested on a case-to-case basis as per the directions of SEBI.