Sebi amends rules for dilution of stake by promoters

With market regulator Sebi amending its rules, promoters can now use rights and bonus issue of shares for dilution of their stake to meet minimum public holding norms. It said it would consider further relaxation in the matter on case by case basis.

The promoters would have to forego their entitlement to shares being issued in such rights and bonus issues, according to a circular issued by the Securities and Exchange Board of India (Sebi).

The two additional avenues for sale of shares by promoters to meet minimum public holding (25 per cent for private sector companies and 10 per cent for PSU entities) norms received approval from Sebi's board on 16 August.

According to the board approval, Sebi had now amended its relevant regulations, the market regulator said.

Promoters are currently allowed to dilute their holdings through newly introduced methods like IPP (Institutional Placement Programme) and Offer for Sale (OFS), as also traditional routes like Follow-on Public Offer (FPO).

The regulator added that listed entities desirous of achieving the minimum public shareholding requirement through other means may approach Sebi with appropriate details.

"Further, listed entities desirous of seeking any relaxation from the available methods may approach Sebi with appropriate details," it said.

It added such requests would be considered by it on merit and the regulator would seek to communicate its decision within 30 days from the date of receipt of such requests.