SEBI relaxes minimum public shareholding norms till August

On May 14, the Securities and Exchange Board of India (SEBI) on Thursday relaxed the 25% minimum public shareholding norm and advised exchanges not to take penal action, till August 2020, against companies in case of non-compliance.

The security market regulator via a circular stated that it took the decision after considering requests from listed companies and industry bodies along with considering the current market and business conditions.

“Accordingly, the stipulations of the aforesaid October 10, 2017 SEBI circular are relaxed for listed entities for whom the deadline to comply with Minimum Public Shareholding (MPS) requirements falls between the period from March 1, 2020 to August 31, 2020...,” it said.

It further said that any penal actions have been initiated by stock exchanges from March 1, 2020 for non-compliance of the Minimum Public Shareholding requirements by such listed entities may be withdrawn.

The circular comes into force with immediate effect, it said. SEBI asked stock exchanges to bring the provisions of this circular to the notice of all listed entities that have issued specified securities and also disseminate it on their websites.

As per SEBI norms, listed entities are required to have at least 25% public shareholding and its circular dated October 10, 2017 laid down the procedure to be followed by stock exchanges with respect to non-compliant companies, their promoters and directors. As per the norms, the recognised stock exchange shall impose a fine of Rs. 5,000 per day of non-compliance on the listed entity and such fine shall continue to be imposed till the date of compliance by such listed entity. Among other actions, the exchange would also intimate the depositories to freeze the entire shareholding of the promoter and promoter group in such listed entity till the date of compliance by such entity.