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Oct 11, 2017 04:53 PM IST | Source:

SEBI to fine cos, freeze promoter rights for flouting minimum public holding norms

The MPS norms state that a listed company must have least 25 percent in public shareholding.

As part of its move to bring about reforms in shareholding pattern, Securities and Exchange Board of India (SEBI) will be imposing a penalty on a company if it doesn't adhere to the minimum public shareholding (MPC) norms. The promoters of such companies will also have their decision-making rights curtailed, reports Mint.

The MPS norms state that a listed company must have least 25 percent in public shareholding.

If a company fails to comply with MPC for 15 days, then its shareholding will be frozen, reads the SEBI circular. The directors of the company will also not be allowed to hold such positions in another company until the non-conforming company fulfils the 25 percent public shareholding norm.

The companies, which are found to have non-complied will be asked to cough up a fine of Rs 5000 a day.

This penalty will rise to a daily sum of Rs 10,000 if the non-compliance were to last for more than a year.

A SEBI circular issued on Tuesday states: “The recognized stock exchange shall intimate the depositories to freeze all the securities held in the demat account of the promoter and promoter group until the date of compliance by such entity.”

According to the report, the stock exchanges must publish a list of the non-compliant companies, the fine levied, the days of non-compliance and the action taken against the promoters.

The report states that 1,886 companies are currently non-compliant with MPS norms. Of these, 1,795 firms are private sector listed companies.The report also said that these rules are applicable for private companies only. State-run companies have been given time to meet the MPS regulations until March.
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