Govt to extend 25% public float exemption for LIC much beyond current 5 years: Report

Companies also have to meet 10% of the MPS norm within two years of listing, despite the overall five year exemption. With LIC offloading 3.5% stake in May last year and one and a half years already gone since the listing, it is impossible for the company to dilute another 6.5% stake by May 2024. More importantly, LIC is trading at a 33% discount to the issue price and 27% to the listing price, cancelling out any possibility of a follow on public issue, for now.

The government is now likely to come out with a longer/extended exemption for the Corporation from MPS norms, beyond the five years given by SEBI, keeping the market regulator's guidelines in context. The extension of exemption is likely to fall under SCRA rules (Securities Contract Regulation Act), which empowers government to exempt CPSEs from MPS for a specified period.

Earlier this year, the government had amended the SCRA rules, which gives it the right to tweak public float timelines for CPSEs , without a SEBI nod.