The Securities and Exchange Board of India (SEBI) has issued a Circular on Manner of Achieving Minimum Public Shareholding. This Circular was issued on 3rd February, 2023.
Previously, SEBI had permitted different methods that could be used by listed entities to achieve compliance with the minimum public shareholding (MPS) requirements under the Securities Contracts (Regulation) Rules, 1957 and the Securities and Exchange Board of India(Listing Obligations and Disclosure Requirements) Regulations, 2015.
However, several listed entities and other stakeholders are requesting relaxation from compliance with the conditions specified in the existing methods. They are also seeking approval for using non-prescribed methods to achieve MPS compliance.
Hence, in order to help achieve MPS compliance, a few of the existing methods have been reviewed and rationalized and two additional methods have been introduced.
The Stock Exchange(s) must monitor the methods adopted by listed entities to increase their public holding and comply with MPS requirements in accordance with this circular. The Stock Exchange(s) must report to SEBI any non-compliance(s) observed by the Stock Exchange(s) with respect to the method(s) and / or conditions prescribed. These shall be reported on a quarterly basis.
