Sebi allows use of open market sale, QIPs to meet MPS norms

NEW DELHI: In a bid to further facilitate listed companies to comply with the minimum public shareholding (MPS) requirements, the markets watchdog Sebi on Thursday allowed firms to meet norms via open market sale and qualified institutional placements (QIPs).

In a release, Sebi said that promoters or promoter group can sell up to 2 per cent of the total paid-up equity share capital of the listed company in the open market. Such a sale though will be subjected to up to five times the average monthly trading volume of the stock, Sebi said.

The listed firm also needs to inform stock exchanges about the stake sale at least one trading day prior to the proposed sale. The firm would need to give information about the intention of the sale, the divesting promoters, the number of shares and percentage to be divested and the period in which the entire process will be completed.


Meanwhile, Sebi allowed listed companies to allot shares to qualified institutional placements.

The regulator had last year asked exchanges to impose a fine on non-compliant companies, freeze promoter shares and bar promoters from being promoters in other listed companies till they do not comply.

The government last year extended the deadline for listed PSUs to achieve the minimum 25 per cent public shareholding norm by a year to August 2018.