Sebi grants temporary relief to companies from public float norms

Sources say companies had approached the regulator seeking relaxation citing unfavorable market conditions through investment bankers and industry bodies

Market regulator Securities and Exchange Board of India (Sebi) has granted temporary reprieve to companies from complying with the 25 per cent minimum public shareholding (MPS) norm. In a circular on Thursday, it said “been decided to grant relaxation from the applicability of the October 10, 2017 circular…for listed entities for whom the deadline to comply with MPS requirements falls between March 1, 2020 and August 31, 2020.”

The October 10, 2017 lays down the procedure to be followed by stock exchanges with respect to MPS non-compliant companies, their promoters and directors. The penal action includes fines and freezing of excess promoter holding. Sources say companies had, through investment bankers and industry bodies, approached the regulator seeking relaxation citing unfavourable market conditions.

The list of companies where promoter holding is more than 75 per cent is dominated by public sector undertakings (PSUs). Some of them include General Insurance Corporation of India, Hindustan Aeronautics and New India Assurance. However, these companies had listed during 2017 and 2018. Sebi rules allow up to three years from the date of listing to bring down promoter holding to 75 per cent.

Experts said Sebi’s relaxation will also benefit companies where promoter holding has increased beyond 75 per cent due to open offers or other acquisitions.