Non-promoter holding on a continuous basis and minimum number of shareholders
Summary
SEBI mandates that listed companies maintain a continuous minimum level of non-promoter holding equivalent to the public shareholding required at listing. Existing listed companies with insufficient non-promoter holdings as of April 1, 2001, must raise this level to at least 10% within one year or face buyback requirements. The circular simultaneously withdraws the previous requirement for a minimum number of shareholders based on capital issued.
Text
The company shall maintain on a continuous basis, the minimum level of non-promoter holding at the level of public shareholding as required at the time of listing.
Where the non-promoter holding... is less than the limit... the company shall within one year raise the level of non-promoter holding to at least 10%. In case the company fails to do so, it shall buy back the public share holding...
The company agrees that it shall not make preferential allotment or an offer to buy back its securities, if such allotment or offer result in reducing the non-promoter holding below the limit...
The conditions stipulated in sub-clauses (i), (ii) and (iii) shall not apply to the companies referred to BIFR.
When any person acquires or agrees to acquire 5% or more of the voting rights... the acquirer and the company shall comply with the relevant provisions of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997.
When any person acquires or agrees to acquire any securities exceeding 15% of the voting rights... such person shall not acquire any securities exceeding 15% of the voting rights... without complying with the relevant provisions of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997.
This requirement [of at least 5 public shareholders for every Rs. 1 lakh capital issued] is being withdrawn.
You are advised to modify the listing agreement as above and monitor the level of non promoter holding on a half yearly basis from the returns submitted by the companies in specified formats.
Source: SecMarx — Non-promoter holding on a continuous basis and minimum number of shareholders. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.