On 10 October, SEBI issued guide on minimum shareholding compliance.

  • Covers non-compliance with the minimum public shareholding (MPS) requirements.
  • Set out procedure that must be followed in respect of non-compliant listed entities.

Procedure

  • Stock exchanges to review MPS rule compliance, based on shareholding pattern etc.
  • Within 15 days from observation of non-compliance, shall issue notice to the entity.

Non-Compliance

  • In case of non-compliance, impose fine of 5,000 rupees per day of non-compliance.
  • Depositories to freeze promoter, promoter group shareholding, pending compliance.
  • Promoter, promoter group, directors not to hold new positions until entity complies.

Over 1 Year

  • Increased fine of 10,000 rupees per day of non-compliance until date of compliance.
  • Depositories to freeze all promoter and promoter group securities in Demat account.
  • Stock exchange may also consider compulsory de-listing of the non-compliant entity.

Disclosure

  • Stock exchanges shall periodically disclose on their website names of non-compliant
    entities, size of fine, freezing of shares, other action and status of entity compliance.

Effectiveness

  • Circular to come into force with immediate effect.