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The Securities and Exchange Board of India (Sebi) is mulling a one-year expiry period from the date of intimation for reclassification of promoters as public shareholders.
"The present regulatory framework does not prescribe criteria for re classification, it is proposed to prescribe specific criteria to lend objectivity to the process of reclassification of promoters of listed companies as public shareholders," Sebi said in a discussion paper titled 'Reclassification of promoters as public', released on Tuesday.
Promoter reclassification had become a contentious issue last year, when some entities were seen reclassifying themselves as ordinary shareholders ahead of the deadline for achieving the mandatory 25 per cent public float.
The lack of a framework in this regard had led to confusion and litigation in cases including Gokaldas Exports and Gillette India, where entities belonging to the promoter group had sought reclassification.
