Minimum public holding: SEBI provides additional avenues to listed firms

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The Securities and Exchange Board of India (Sebi) on Thursday provided two additional measures to listed companies to ensure these firms comply with 25 per cent minimum public shareholding norms.

Highlights

  • Sebi allowed listed firms to allot shares to qualified institutions placement (QIP). The regulator also allowed promoters or promoter groups to sell up to two per cent of the total paid-up equity share capital of the listed firm in the open market. Sebi, however said, such a sale will be subjected to up to five times average monthly trading volume of the stock.
  • Under Sebi norms, every listed firm will need to maintain a public shareholding of at least 25 per cent. Listed public sector companies have been provided additional time till August 21, 2018 to comply with the requirements.
  • Currently, listed companies can use several routes to comply with the minimum public shareholding requirements. These include issuance of shares to public through prospectus, offer for sale to public through prospectus, sale of shares held by promoters through secondary market institutional placement programme, rights issue to public shareholders and bonus shares to public shareholders.
  • Sebi said that the listed entity will have to inform the stock exchanges on the intention of the promoter to sell, the purpose of the sale, the percentage of shareholding to be divested and the entire divestment process among other things, at least one trading day prior to the proposed sale.
  • The listed entity shall also give an undertaking to the recognized stock exchange(s) obtained from the persons belonging to the promoter and promoter groups that they shall not buy any shares in the open market on the dates on which the shares are being sold by promoter(s)/promoter group,” Sebi said.

Securities and Exchange Board of India (SEBI)

Securities and Exchange Board of India is a government established in 1988 authority which controls the securities market in India. Indian Parliament passed SEBI Act 1992 in 1992 India which made SEBI a statutory body. SEBI functions to fulfill the requirements of the following three categories.

  • Issuers –It provides a marketplace in which the issuers can increase finance properly.
  • Investors –It ensure safety and supply of precise and accurate information
  • Intermediaries –It enables a competitive professional market for intermediaries.

The headquarters of SEBI is situated in Mumbai. The regional offices of SEBI are located in Ahmadabad, Kolkata, Chennai and Delhi.


Q. 1 Consider the followings with respect to Securities and Exchange Board of India

  1. the Chairman by nominated by Government of India
  2. SEBI is objective to control activities of stock exchange.
  3. Under SEBI new norms, every listed firm will need to maintain a public shareholding of at least 20 per cent

Choose the correct answer from the above

  1. 1 and 2 only
  2. 1 and 3 only
  3. 1 only
  4. All of the above

 

Answer:

a. 1 and 2 only

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