Minimum public holding: SEBI provides additional avenues to listed firms

The Securities and Exchange Board of India (Sebi) on 22 February 2018 provided two additional measures to listed companies to ensure these firms comply with 25 per cent minimum public shareholding norms. Under Sebi norms, every listed firm will need to maintain a public shareholding of at least 25 per cent. Listed public sector companies have been provided additional time till August 21, 2018 to comply with the requirements.

Sebi allowed listed firms to allot shares to qualified institutions placement (QIP). The regulator also allowed promoters or promoter groups to sell up to two per cent of the total paid-up equity share capital of the listed firm in the open market. Sebi, however said, such a sale will be subjected to up to five times average monthly trading volume of the stock.

These include issuance of shares to public through prospectus, offer for sale to public through prospectus, sale of shares held by promoters through secondary market institutional placement programme, rights issue to public shareholders and bonus shares to public shareholders. The listed entity shall also give an undertaking to the recognized stock exchange(s) obtained from the persons belonging to the promoter and promoter groups that they shall not buy any shares in the open market on the dates on which the shares are being sold by promoter(s)/promoter group.

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