SEBI issues Circular on Manner of Achieving Minimum Public Shareholding

Feb 22, 2018 | by Avantis RegTech Legal Research Team

A |  A

The Securities and Exchange Board of India (SEBI) Circular No. CIR/CFD/CMD/14/2015 dated November 30, 2015 allowed for various methods that may be used by a listed entity to achieve compliance with the minimum public shareholding requirements mandated under Rules 19(2) (b) and 19A of the Securities Contracts (Regulation) Rules, 1957 (SCRR) read with Regulation 38 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.

With a view to further facilitate listed entities to comply with the minimum public shareholding requirements, the following additional methods are allowed by SEBI:

a)       Open market sale: Sale of shares held by the promoters/promoter group up to 2% of the total paid-up equity share capital of the listed entity in the open market, subject to five times’ average monthly trading volume of the shares of the listed entity;

b)    Qualified Institutions Placement: Allotment of eligible securities through Qualified Institutions Placement in terms of Chapter VIII of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009.

Conditions for open market sale are as under:

a)       In respect of the method mentioned at (a) above, the listed entity shall, at least one trading day prior to every such proposed sale, announce the following details to the stock exchange(s) where its shares are listed:

(i)      the intention of the promoter/promoter group to sell and the purpose of sale;

(ii)    the details of promoter(s)/promoter group, who propose to divest their shareholding;

(iii)  total number of shares and percentage of shareholding proposed to be divested; and

(iv)   The period within which the entire divestment process will be completed.

c)       The listed entity shall also give an undertaking to the recognized stock exchange(s) obtained from the persons belonging to the promoter and promoter group that they shall not buy any shares in the open market on the dates on which the shares are being sold by promoter(s)/promoter group as stated above.

d)       The listed entity, its promoter(s) and promoter group shall ensure compliance with all applicable legal provisions including that of the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015 and Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011.

Pursuant to the above, a compilation of all methods allowed for achieving compliance with the minimum public shareholding requirements is placed at Annexure for reference.

[Circular No.: SEBI/HO/CFD/CMD/CIR/P/43/2018]




Related Updates

Alternate Text

Get updates on the go on RuleZbook Mobile App.