Listed firms have till 2021 to comply with minimum shareholding rules: FinMin

Extending the time period for compliance, the finance ministry amended the Securities Contracts (Regulation) Rules to allow companies three years to attain the minimum public shareholding, effective from July 31.

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The latest finance ministry amendment was the second major relief companies have got in this regard on account of the pandemic. On May 14, the Securities and Exchange Board of India (SEBI) relaxed the applicability of action on non-compliant entities due to Covid-19.
Listed public sector enterprises now have another year to comply with minimum shareholding period (MPS) rules, which require them to have at least 25% public shareholding, according to a government notification.

The earlier rule had given these companies two years to comply, from 2018, the deadline for which fell in August this year.

Extending the time period for compliance, the finance ministry on Friday amended the Securities Contracts (Regulation) Rules to allow public sector listed companies three years to attain the minimum public shareholding, effectively giving them an additional year.


Once an entity is listed, its promoters and promoter groups are required to bring down their shareholding down to 75% as stipulated by the norm. Additional relaxation was provided to public sector enterprises.

On May 14, the Securities and Exchange Board of India relaxed the applicability of action on non-compliant entities due to Covid-19.

“After taking into consideration requests received from listed entities and industry bodies as well as considering the prevailing business and market conditions, it has been decided to grant relaxation from the applicability of the October 10, 2017, circular,” the May 14 circular said.
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“Accordingly, the stipulations of the aforesaid October 10, 2017, SEBI circular are relaxed for listed entities for whom the deadline to comply with MPS requirements falls between the period from March 1, 2020, to August 31, 2020.”

According to the 2017 circular, if found non-compliant, exchanges could impose a fine of up to Rs 10,000 on companies for each day of non-compliance apart from intimating depositories to freeze the entire shareholding of the promoter and promoter group.
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