The board of the Securities and Exchange Board of India (SEBI) has made a rejig in the minimum public shareholding norms for listed companies facing bankruptcy under the Insolvency and Bankruptcy Code (IBC) and get relisted on the stock market. Post the SEBI board's decision, such companies will be mandated to have at least 5 percent public shareholding at the time of their admission to dealing on the stock exchange, as against no minimum requirement at present.

Presently, during Corporate Insolvency Resolution Process (CIRP) where the public shareholding falls below 10 percent, such listed companies are required to bring the public shareholding to at least 10 percent within a period of 18 months and to 25 percent within 36 months. "Further, such companies will be provided 12 months to achieve public shareholding of 10 percent from the date such shares of the company are admitted to dealings on the stock exchange and 36 months to achieve public shareholding of 25 percent from the said date," it said.

The lock-in on equity shares allotted to the resolution applicant under the resolution plan shall not be applicable to the extent to achieve 10 percent public shareholding within 12 months. In a statement, the capital market regulator said that such companies shall be required to make additional disclosures, such as specific details of resolution plan including details of assets post-CIRP, details of securities continuing to be imposed on the companies' assets and other material liabilities imposed on the company. The company will also have to lay down the proposed steps to be taken by the incoming investor or acquirer for achieving the minimum public shareholding (MPS) and quarterly disclosure of the status of achieving the MPS.

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