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Additional methods prescribed by SEBI for achieving Minimum Public Shareholding - MMJC
Every listed entity is mandated to maintain Minimum Public Shareholding (“MPS”) under Rule 19(2)(b) and 19A of the Securities Contracts (Regulation) Rules, 1957 read with Regulation 38 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“LODR Regulations”). In case of listed entities whose MPS falls below the prescribed threshold, SEBI has prescribed various methods, through its circulars from time to time, to achieve the MPS.
Recently on February 03, 2023, SEBI issued another circular to provide additional methods for achieving minimum public shareholding. The methods along with conditions for it to be considered as a manner of achieving minimum public shareholding are tabled below:
| Method | Specific conditions |
| Increase in public holding pursuant to exercise of options and allotment of shares under an employee stock option (ESOP) scheme, subject to a maximum of 2% of the paid-up equity share capital of the listed entity. | The ESOP scheme shall comply with the Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 and the promoter(s) / promoter group shall not be allotted any shares |
| Transfer of shares held by promoter(s) / promoter group to an Exchange Traded Fund (ETF) managed by a SEBI registered mutual fund, subject to a maximum of 5% of the paid-up equity share capital of the listed entity. | The listed entity shall, at least one trading day prior to such proposed transfer, announce the following details to the stock exchange(s) where its shares are listed: the intention of the promoter(s) /promoter group to transfer shares and the purpose of such transfer; the details of promoter(s)/promoter group who propose to transfer their shares in the listed entity; total number of shares and percentage of shareholding proposed to be transferred; and Details of the ETF to which shares are proposed to be transferred by the promoter / promoter group. The listed entity shall also give an undertaking to the recognized stock exchange(s) obtained from the persons belonging to the promoter and promoter group that they shall not subscribe to the units of such ETF to which shares have been transferred by promoter(s) / promoter group entities for the purpose of MPS compliance. |
Considering all amendments and circulars, SEBI has kept a residual clause of any other method as may be approved by SEBI on a case-to-case basis on application by Listed Entity, for achieving minimum public shareholding by listed entity.