• The Securities and Exchange Board of India (SEBI) has proposed to increase the flexibility of Minimum Public Shareholding (MPS) and Minimum Public Offer (MPO) norms for companies aspiring to get listed, with an aim to simplify fundraising in Indian markets.
• The MPS rule, introduced under the Securities Contracts (Regulation) Rules, 1957 and reinforced by SEBI’s LODR Regulations, mandates that all listed companies maintain at least 25% of their equity with public shareholders - excluding promoters and promoter group entities. Promoters holding more than 75% are required to reduce their stake through share placements or rights issues.
• The objective of the rule is to enhance market liquidity, promote fair price discovery, and strengthen corporate governance.
• While newly listed companies are required to achieve 25% MPS within three years of listing, those with a post-issue market cap exceeding ₹1 trillion get five years.
• In case public shareholding falls below 25%, companies must restore it within 12 months.
• SEBI’s latest move could provide issuers more options to meet these norms while maintaining investor confidence and deepening market participation.