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Govt eases listing norms for companies having over Rs 1 lakh crore market capitalisation
Jun-22-2021

In a move that will be beneficial for the government during the proposed initial public offer of LIC, the Department of Economic Affairs under the finance ministry has amended the Securities Contracts (Regulation) Rules. With the latest amendment in rules, companies that have a market capitalisation of more than Rs 1 lakh crore at the time of listing can now sell just five per cent of their shares. Such entities will be required to increase their public shareholding to 10 per cent in two years and raise the same to at least 25 per cent within five years.

The central government has said companies with an m-cap exceeding Rs 1 trillion will have to dilute Rs 5,000 crore and at least 5 per cent of their m-cap. Moreover, companies relisting after insolvency proceedings will need to have 5 per cent minimum public shareholding. This will have to be increased to 10 per cent within a year and 25 per cent in three years. While there was no minimum threshold of public holding at the time of acquisition earlier, it had to be increased to 10 per cent within 18 months.

In February this year, SEBI's board approved relaxing the minimum public offer norms for large issuers. Meanwhile, under the latest amended rules, ‘every listed company shall maintain public shareholding of at least five per cent as a result of implementation of the resolution plan approved under section 31 of the Insolvency and Bankruptcy Code, 2016’. Section 31 pertains to approval of resolution plans. The notification amending the rules was issued on June 18.

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