Context:
The Securities and Exchange Board of India (SEBI) has released a consultation paper to increase flexibility in Minimum Public Shareholding (MPS) and Minimum Public Offer (MPO) requirements. The proposal seeks to simplify fundraising and give listed companies more time to comply with shareholding norms.
Minimum Public Offer (MPO)
MPO refers to the minimum percentage of equity that must be offered to the public at the time of IPO (Initial Public Offer).
Regulation
- Governed under Rule 19(2)(b) of SCRR, 1957.
- Linked to post-issue market capitalization of the company.
- SEBI proposes to raise the MPO for companies approaching listing.
- Thresholds of post-issue market capitalisation revised to:
- ₹4,000 crore – ₹50,000 crore
- ₹50,000 crore – ₹1 lakh crore
- ₹1 lakh crore – ₹5 lakh crore
- Above ₹5 lakh crore
Minimum Public Shareholding (MPS)
MPS is the minimum percentage of shares in a listed company that must be held by the public (non-promoters).
Regulation
- Governed under Rule 19A of Securities Contracts (Regulation) Rules, 1957 (SCRR) and SEBI Listing Regulations.
- Current requirement: 25% public shareholding within 3 years of listing.
- Proposed: For companies with post-issue market cap ₹50,000 crore – ₹1 lakh crore:
- 15% public shareholding within 5 years of listing.
- 25% public shareholding within 10 years of listing.
