SEBI tweaks public shareholding rules for insolvent cos, eases MF licensing norms

Market regulator Securities and Exchange Board of India (SEBI) on Wednesday in its board meeting announced a slew of measures to boost capital market, including changes in the minimum public shareholding norms for listed companies going through insolvency and segregate assets as well as liabilities of mutual funds.

Post the Corporate Insolvency and Resolution Process (CIRP), SEBI has asked such companies to maintain a minimum of 5 per cent public shareholding at the time of their beginning of trading on the stock exchanges. Currently, there is no such minimum requirement.

Further, such companies will be allowed 12 months to achieve public shareholding of 10 per cent from the date such shares are re-listed on stock exchange and 36 months to attain 25 per cent public holding from the said date.

Presently, the norms mandate that in case public holding of such company falls below 10 per cent, then the same will have to achieve at least 10 per cent within 18 months and 25 per cent within three years.  

Among other changes, SEBI said the lock-in on equity shares allotted to the listed companies under resolution plan will not be applicable to the extent to achieve 10 per cent public shareholding within 12 months.

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SEBI has asked such companies to make additional disclosures, such as specific details of resolution plan including details of assets post-CIRP and details of securities continuing to be imposed on the companies' assets and other material liabilities imposed on the firm.  

The market regulator has also approved the proposal to do away with the applicability of minimum promoters' contribution and the subsequent lock in requirements for the issuers making a further public offer of specified securities, subject to certain conditions.

For the mutual fund segment, the SEBI has relaxed the profitability criteria and mandated minimum Rs 100 crore net worth requirement for entities to become sponsors of mutual funds. This would help fintech companies that are planning to entering the mutual fund industry to seek MF license.  

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The watchdog has also decided to segregate and ring-fence assets and liabilities of mutual fund schemes. This is in addition to the existing requirement of segregating bank accounts and securities accounts.

The SEBI board approved proposals including dispensing with the requirement to issue physical unit certificates, reducing maximum permissible exit load and reducing the timeline for payment of dividend.

Also, the board cleared a proposal for permitting other modes for payment of dividend and providing clarity with respect to payment of interest and penalty in case of delay in dividend payment.

By Chitranjan Kumar