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Sebi tweaks minimum public shareholding norms for listed companies under insolvency resolution process

Another change for listed companies under resolution plan is that the lock-in on equity shares allotted to the resolution applicant will not be applicable until 10 percent pubic holding is achieved

December 17, 2020 / 11:43 AM IST

The capital market regulator Securities and Exchange Board of India (Sebi) on November 16 in its board meeting made some changes in the minimum public shareholding norms for listed companies going through Corporate Insolvency Resolution Process (CIRP).

Sebi asked companies that continue to remain listed as a result of implementation of the resolution plan to have at least 5 percent public shareholding at the time of beginning of trading on the stock exchange/s. Currently, there is no such minimum requirement for companies.

Further, for such companies, Sebi provided 12 months to achieve public shareholding of 10 percent from the day of re-listing of such shares and 36 months to achieve public shareholding of 25 percent from the said date.

Presently, during Corporate Insolvency Resolution Process (CIRP) where the public shareholding falls below 10%, such listed companies are required to bring the public shareholding to at least 10% within a period of 18 months and to 25% within 36 months.

Another change for listed companies under resolution plan is that the lock-in on equity shares allotted to the resolution applicant will not be applicable until 10 percent pubic holding is achieved.

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"The lock-in on equity shares allotted to the resolution applicant under the resolution plan shall not be applicable to the extent to achieve 10 percent public shareholding within 12 months," Sebi said in its circular.

"Such companies shall be required to make additional disclosures, such as, specific details of resolution plan including details of assets post-CIRP, details of securities continuing to be imposed on the companies' assets and other material liabilities imposed on the company, proposed steps to be taken by the incoming investor/acquirer for achieving the minimum public shareholding (MPS) and quarterly disclosure of the status of achieving the MPS," the regulator added.

The Sebi also approved the proposal to do away with the applicability of minimum promoters' contribution and the subsequent lock in requirements for the issuers making a further public offer of specified securities. For the said rule, the following conditions have to be fulfilled.

"1) The equity shares of the issuer should be frequently traded on a stock exchange for a period of at least three years, 2) the issuer has to be in compliance with the listing obligations of Sebi for a period of at least three years, and 3) the issuer has redressed at least ninety-five percent of the complaints received from the investors," Sebi said.
Moneycontrol News
first published: Dec 16, 2020 04:57 pm
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