Getty ImagesListed companies have time till 2023 to comply with minimum shareholding period (MPS) rules, which require them to have at least 25% public shareholding, according to a government notification on Friday.
Extending the time period for compliance, the finance ministry amended the Securities Contracts (Regulation) Rules to allow companies three years to attain the minimum public shareholding, effective from July 31.
Where the earlier rules provided for two years to comply, from 2018, the amendment extended the period by an additional year in the provisions, which resulted in a 2023 deadline.
“In the Securities Contracts (Regulation) Rules, 1957, in rule 19A, in sub-rule (1), in the proviso, for the words “two years” the words “three years” shall be substituted,” the notification said.
Once a company is listed, its promoters and promoter groups are required to bring down their shareholding down to 75% within the stipulated MPS. After that, it is required to maintain the minimum public shareholding level or face non-compliance penalties.
The latest finance ministry amendment was the second major relief companies have got in this regard on account of the pandemic. On May 14, the Securities and Exchange Board of India (SEBI) relaxed the applicability of action on non-compliant entities due to Covid-19.
“After taking into consideration requests received from listed entities and industry bodies as well as considering the prevailing business and market conditions, it has been decided to grant relaxation from the applicability of the October 10, 2017 circular,” the May 14 circular said.
“Accordingly, the stipulations of the aforesaid October 10, 2017 SEBI circular are 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,” it added.
As per the 2017 circular, if found non-compliant, exchanges could impose a fine of up to Rs 10,000 on companies for each day of non-compliance apart from intimating depositories to freeze the entire shareholding of the promoter and promoter group.
Extending the time period for compliance, the finance ministry amended the Securities Contracts (Regulation) Rules to allow companies three years to attain the minimum public shareholding, effective from July 31.
Where the earlier rules provided for two years to comply, from 2018, the amendment extended the period by an additional year in the provisions, which resulted in a 2023 deadline.
“In the Securities Contracts (Regulation) Rules, 1957, in rule 19A, in sub-rule (1), in the proviso, for the words “two years” the words “three years” shall be substituted,” the notification said.
Once a company is listed, its promoters and promoter groups are required to bring down their shareholding down to 75% within the stipulated MPS. After that, it is required to maintain the minimum public shareholding level or face non-compliance penalties.
The latest finance ministry amendment was the second major relief companies have got in this regard on account of the pandemic. On May 14, the Securities and Exchange Board of India (SEBI) relaxed the applicability of action on non-compliant entities due to Covid-19.
“After taking into consideration requests received from listed entities and industry bodies as well as considering the prevailing business and market conditions, it has been decided to grant relaxation from the applicability of the October 10, 2017 circular,” the May 14 circular said.
“Accordingly, the stipulations of the aforesaid October 10, 2017 SEBI circular are 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,” it added.
As per the 2017 circular, if found non-compliant, exchanges could impose a fine of up to Rs 10,000 on companies for each day of non-compliance apart from intimating depositories to freeze the entire shareholding of the promoter and promoter group.