Minimum Public Shareholding : SEBI
SEBI recently proposed to increase the flexibility of Minimum Public Shareholding (MPS) and Minimum Public Offer (MPO) for companies aspiring to get listed, aimed at “simplifying fund-raising by issuers in India.
- The Minimum Public Shareholding (MPS) rule is a regulatory requirement laid out by SEBI under the Securities Contracts (Regulation) Rules, 1957, and reinforced by the Listing Obligations and Disclosure Requirements (LODR) Regulations.
- It is applicable to all listed companies in India.
- As per these rules, all listed companies must ensure that at least 25% of their total issued and paid-up equity share capital is held by public shareholders—i.e., non-promoters and non-promoter group entities.
- Where promoters are holding more than 75%, they have to mandatorily divest additional shares to the public to comply with the MPS rule.
- Such stake reduction could be done either by placing shares with institutions or by issuing rights shares to dilute their holdings.
- The objective is to:
- Enhance liquidity in the market
- Promote fair price discovery
- Ensure broader participation and corporate governance
- Newly listed companies are expected to meet this requirement within three years from the date of listing.
- For issuers with a post-issue market cap of over ₹1 trillion, the deadline for 25% MPS is five years.
- If the public shareholding falls below 25% at any time, such company shall bring the public shareholding to 25% within a maximum period of 12 months from the date of such fall.
