SEBI Update: Manner of achieving minimum public shareholding dated 3rd February, 2023

SEBI vide its Circular dated 3 rd Februray, 2023 notified the manner of achieving minimum public shareholding.

SEBI has been receiving representations from listed entities and other stakeholders requesting relaxation from compliance with the conditions specified in the existing methods and approval for using non-prescribed methods to achieve MPS compliance.

In view of the above and to facilitate listed entities achieve MPS compliance, a few of the existing methods have been reviewed and rationalized and two additional methods have been introduced which are specified in the table below:

Sr No. Method Specific conditions, if any, applicable 1. Issuance of shares to public through prospectus 2. Offer for sale of shares held by promoter(s) / promoter group to public through prospectus 3. Offer for sale of shares held by promoter(s) / promoter group through the Stock Exchange mechanism i.e., the secondary market, in terms of circular reference No. SEBI/HO/MRD/MRD-PoD3/P/CIR/ 2023/10 dated January 10, 2023. 4. Rights issue to public shareholders Promoter(s) / promoter group shareholders shall forgo their entitlement to equity shares that may arise from such issue 5. Bonus Issue to public shareholders Promoter(s) / promoter group shareholders shall forgo their entitlement to equity shares that may arise from such issue. 6. Allotment of equity shares under Qualified Institutions Placement in terms of Chapter VI of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018. 7. Sale of shares held by promoter(s) / promoter group in the open market in any one of the following ways, subject to compliance with the conditions specified: i. Promoter(s) / Promoter group can sell up to 2% of the total paid-up equity share capital of the listed entity, subject to five times’ average monthly trading volume of the shares of the listed entity, every financial year till the due date for MPS compliance as per the SCRR (or) ii. Promoter(s) / Promoter group can sell upto a maximum of 5% of the paid-up capital of the listed entity during a financial year subject to the condition that the public holding in the listed entity shall become 25% after completion of such sale. The sale can be a single tranche or in multiple tranches not exceeding a period of 12 months and the amount of shares to be sold shall not exceed the trading volume of the shares of the listed entity during the preceding 12 months from th