Amendments to Clause 40A and Clause 35 of Equity Listing Agreement

SEBI/CFD/DIL/LA/2006/13/4 · 2006-04-13 · SEBI Corporation Finance Department Division of Issues and Listing

Summary

This section mandates a minimum public shareholding of 25% for listed companies, with specific exemptions and reduced thresholds for certain entities. It establishes a mechanism for non-compliant companies to increase their public shareholding to the required level within a timeframe approved by the Specified Stock Exchange. The text also defines 'public shareholding' and outlines reporting requirements for shareholding patterns under revised Listing Agreement clauses. This section outlines restrictions on share allotments and buybacks to maintain minimum public shareholding levels. It provides mechanisms for the Stock Exchange to extend compliance timelines due to supervening extraordinary events and mandates corrective actions if thresholds are breached. Additionally, it defines key terms like 'public shareholding' and specifies quarterly disclosure requirements for shareholding patterns. This section mandates the disclosure of details regarding locked-in shares and Depository Receipts (DRs) held by shareholders. It requires specific statements for DRs where underlying shares exceed one percent of the total share capital. Additionally, it includes an annexure for reporting compli

Text

All listed companies... will be required to ensure minimum level of public shareholding at 25% of the total number of issued shares of a class or kind for the purpose of continuous listing

Companies which, at the time of initial listing, had offered less than 25% but not less than 10%... in terms of Rule 19(2)(b) of Securities Contract (Regulation) Rules 1957... will be required to maintain the minimum level of public shareholding at 10%

Companies which have... reached a size of two crore or more in terms of number of listed shares and Rs. 1000 crore or more in terms of market capitalization... will be required to maintain the minimum level of public shareholding at 10%

The aforesaid requirement... will not be applicable to government companies... infrastructure companies... and companies referred to the Board for Industrial and Financial Reconstruction

The “public shareholding”... will continue to comprise of shares held by entities other than promoters and promoter group and shares held by custodians against which depository receipts are issued overseas

It has been decided to provide a transparent mechanism to such non-compliant companies for enabling them to graduate to the level of compliant companies... various modes of issuing shares in domestic market and reasonable time period, as approved by Specified Stock Exchange

The shareholding pattern will now be indicated under three categories, viz., “shares held by promoter and promoter group”, “shares held by public” and “shares held by custodians and against which Depository Receipts have been issued,”

The company agrees to maintain on a continuous basis, public shareholding of at least 25% of the total number of issued shares of a class or kind, for every such class or kind of its shares which are listed

Where the company offers or has in the past offered a particular class or kind of its shares to the public to the extent of at least 10%... it agrees to maintain on a continuous basis, public shareholding of at least 10%

Where the number of outstanding listed shares... are two crore or more and the market capitalization... is Rs. 1000 crore or more, it agrees to maintain on a continuous basis, public shareholding of at least 10%

the company agrees to increase public shareholding... to 25% or 10%... within such period as may be approved by the Specified Stock Exchange (SSE) but not exceeding two years from the said date

Provided that the SSE may... extend the time for compliance with the requirement of minimum level of public shareholding by a further period not exceeding one year

Source: SecMarx — Amendments to Clause 40A and Clause 35 of Equity Listing Agreement. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.