 "Sebi, minimum public shareholding, open offers, listed companies, compliance, public float, market capitalisation, Hyundai Motor India, Bajaj Housing Finance")
The Securities and Exchange Board of India’s (Sebi’s) proposal to extend the timeline for meeting the 25 per cent minimum public shareholding (MPS) requirement could benefit both listed companies and open offers.
At present, newly listed companies such as Hyundai Motor India and Bajaj Housing Finance have promoter shareholding above the 75 per cent threshold. Legal experts say these companies could get more flexibility if the market regulator’s proposal to provide an extended compliance window is approved.
Currently, the Securities Contract (Regulations) Rules (SCRR) mandate a five-year period to reach 25 per cent public shareholding. Sebi has now proposed extending this to up to 10 years for companies with an after-issue market capitalisation of ₹1 trillion or more.
If a company lists with less than 15 per cent public shareholding, it must reach 15 per cent within five years and 25 per cent within 10 years. If it lists with 15 per cent or more, the 25 per cent threshold must be achieved within five years, Sebi has proposed.
As of the April-June quarter of 2025-26, Hyundai Motor India had 17.5 per cent public holding, while Bajaj Housing Finance stood at 11.5 per cent. Other large firms with low public float include Life Insurance Corporation of India, with just 3.5 per cent public shareholding (under a government exemption), and NTPC Green Energy, which listed in November 2024 with 10.9 per cent public holding.
Legal experts say the benefits could also extend to acquisitions and open offers, since takeover regulations reference SCRR timelines.
Yogesh Chande, an advocate specialising in securities laws, said Sebi’s proposal also applies the extended timelines to listed entities that have not yet achieved MPS, with certain conditions.
“The proposed MPS relaxations should, in principle, extend to already listed companies still working towards the 25 per cent public float, especially those in the megacap category. Sebi’s intent is to ease the compliance burden and align timelines with market absorption capacity, so excluding incumbents would create an uneven playing field. At the same time, this calibrated approach balances the need for orderly dilution with investor protection, allowing companies more time without undermining the eventual goal of broad-based public ownership,” said Hardeep Sachdeva, senior partner, AZB & Partners.
Saiyam Chaturvedi, partner at DMD Advocates, added that even companies currently non-compliant but covered under the new timelines may avoid future penalties, although fines already imposed by exchanges for past violations will remain payable.
However, not all experts agree that retrospective relief will be granted.
“Very few laws operate retrospectively. Allowing extensions across the board could be unfair to companies that have already complied with the existing five-year requirement,” said Geeta Dhania, partner at Economic Laws Practice.
From a merger and acquisition perspective, Sebi’s proposals could ease compliance for acquirers and open offers under the Sebi (Substantial Acquisition of Shares and Takeovers) (SAST) Regulations.
“If after an open offer, the shareholding of the acquirer exceeds the maximum permissible non-public shareholding, the acquirer is obliged to bring it down to the specified level within the time permitted under SCRR,” explained Chande.
Rohit Jain, managing partner at Singhania & Co, agreed but emphasised caution. “If the proposed recalibration of SCRR timelines takes effect, it could simplify compliance for acquirers. But until Sebi explicitly aligns the SAST framework with these changes, acquirers should continue to adhere to the existing timelines.”
