Markets regulator Sebi on Thursday decided to ease norms for reclassification of a promoter as a public shareholder.
The board of Sebi approved the proposal to rationalise the existing framework pertaining to reclassification of promoter/ promoter group entities, the regulator said in a statement.
This includes exemption from existing requirements, in cases of reclassification pursuant to an order of the regulator under any law in line with existing exemption already available in cases of resolution plan approved under the Insolvency and Bankruptcy Code.
The exemption has also been provided from the requirement of seeking approval of shareholders in cases where the promoter seeking reclassification holds shareholding of less than 1 per cent, subject to the promoter not being in control, Sebi said.
In addition, exemptions have also been granted in few procedural requirements related to reclassification such as obtaining request from promoter, approval from the board and shareholders in case of open offer under Sebi Takeover Regulations and scheme of arrangement. “This exemption shall be subject to the outgoing promoter’s intent of reclassification being disclosed in the letter of offer or scheme of arrangement alongwith fulfilling other requirements such as not being in control, not represented on the Board, etc,” Sebi said.
It has also been decided to reduce the time gap between the date of board meeting and shareholders meeting for consideration of reclassification request to a minimum of one month and a maximum of three months from the existing requirement of minimum period of three months and maximum six months.
In November 2020, the Securities and Exchange Board of India (Sebi) came out with a consultation paper whereby it proposed to relax rules for reclassification of promoter as public shareholder.
Under the proposal, Sebi had said the reclassification condition on shareholding should be amended such that the promoter and related persons seeking reclassification should not together hold 15 per cent or more of the total voting rights in the listed entity.
At present, the minimum threshold requirement is 10 per cent.
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