Government introduces tiered to public float norms based on market capitalisation

The Union Ministry of Finance has notified amendments to the Securities Contracts (Regulation) Rules, 1957 that revise the minimum public shareholding requirements for companies listing on Indian stock exchanges.

The changes introduce a tiered framework in which the minimum public float depends on the company's post-issue market capitalisation.

Under the revised rules, companies with post-issue capital of up to Rs 1,600 crore must continue to offer at least 25% of their equity to the public at the time of listing.

The companies with post-issue capital between Rs 1,600 crore and Rs 4,000 crore must offer shares worth at least Rs 400 crore to the public, while firms with post-issue capital between Rs 4,000 crore and Rs 50,000 crore must offer at least 10% of equity.

In both cases, companies are required to increase public shareholding to 25% within three years of listing.

For companies with post-issue capital between Rs 50,000 crore and Rs 1 lakh crore, the minimum public offer must be at least Rs 1,000 crore and not less than 8% of equity. These companies are required to reach the 25% public shareholding threshold within five years of listing.

The companies with post-issue capital between Rs 1 lakh crore and Rs 5 lakh crore must offer shares worth at least Rs 6,250 crore and at least 2.75% of equity to the public.

For companies with post-issue capital above Rs 5 lakh crore, the minimum offer must be at least Rs 15,000 crore and at least 1% of equity, subject to a mandatory floor of 2.5% public shareholding at the time of listing.

Where companies in these larger categories list with public shareholding below 15%, they must increase it to at least 15% within five years and to 25% within ten years.

If the public shareholding at listing is already 15% or higher, the company must increase it to 25% within a period of five years.

The amendments also clarify that companies issuing equity shares with superior voting rights to promoters must list those shares alongside the ordinary shares being offered to the public.

Additionally, stock exchanges retain the authority to impose penalties for non-compliance with public shareholding norms.

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