SEBI gives additional avenues for minimum public shareholding

Markets regulator SEBI on Thursday provided two additional measures to listed companies to ensure such entities comply with 25 per cent minimum public shareholding norms.

These additional methods are qualified institutions placement (QIP) and sale of shares up to two per cent held by promoters or promoter groups in the open market, the regulator said in a circular.

Under SEBI norms, every listed firm would need to maintain a public shareholding of at least 25 per cent. Listed public sector companies have been provided additional time till 21 August, 2018 to comply with the requirements.

Currently, several methods are available to listed companies to comply with the requirements. 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.

According to SEBI, companies can sell sale of shares up to  two per cent held by the promoters/promoter group in the open market.

This is subject to five times average monthly trading volume of the shares of the listed entity. Further, the regulator said that the listed entity will announce the details, to the stock exchange, at least one trading day prior to such proposed sale.

The details include the intention of the promoter to sell and the purpose of sale; the details of promoter, who propose to divest their shareholding; total number of shares and percentage of the stake proposed to be divested; and the period within which the entire divestment process will be completed.

“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," SEBI noted.

The regulator has asked listed entities, its promoters to ensure compliance with all applicable legal provisions including that of the Sebi PIT (Prohibition of Insider Trading) and SAST (Securities and Exchange Board of India) Regulations.