SEBI to bring in relaxation in Minimum Promoters’ Contribution and the subsequent lock-in requirements

At its Board meeting recently, Markets regulator SEBI has decided to bring relaxation in Minimum Promoters’ Contribution and the subsequent lock-in requirements towards a follow-on public offering (FPO).

"The Board approved the proposal to do away with the applicability of Minimum Promoters’ Contribution and the subsequent lock-in requirements for the issuers making a further public offer of specified securities subject to fulfillment of the following conditions:

i) The equity shares of the issuers are frequently traded on a stock exchange for a period of at least three years.

ii) The issuer has been in compliance with the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 for a period of at least three years. and

iii) The issuer has redressed at least 95% of the complaints received from the investors," said SEBI in a press release.

Currently, promoters have been asked to contribute 20  per cent towards FPO.

In respect of companies that continue to remain listed due to implementation of the resolution plan under the Insolvency and Bankruptcy Code, SEBI is of the view that such firms will be required to have at least 5 per cent public shareholding at the time of their admission to dealing on the stock exchange. At present, there is no such minimum requirement, the regulator said in a statement after the board meeting.

Further, such companies will be provided 12 months to achieve public shareholding of 10 per cent from the date such shares of the company are admitted to dealings on the stock exchange and 36 months to achieve public shareholding of 25 per cent from the said date.

"Companies coming out of Corporate Insolvency Resolution Process (CIRP) will have to achieve 5% Minimum Public Shareholding (MPS) at the time of relisting, will get 12 months to achieve 10% MPS, 3 years to achieve 25% MPS," said SEBI in a statement.

SEBI has decided all assets and liabilities of a mutual fund scheme will be segregated and ring-fenced from other schemes of fund.