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Oct 10, 2017

SEBI fixes penalty for non-compliance of shareholding norms

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SEBI has tightened the noose on listed companies not adhering to norms with regard to minimum public shareholding (MPS). Those that are non-compliant will have to pay a fine of ?5,000 a day. In addition, the entire promoter holding, except for compliance to MPS, will be frozen by depositories, and the promoter group and directors of the particular company will not be allowed to hold any position in other companies.

According to MPS norms, any listed company must have at least 25 per cent as public share holders while the remaining 75 per cent can be held by promoters. Government-promoted companies were given time till August 2018 to comply with these norms. Newly listed companies are given a three-year window to comply.

De-listing

Further, if the non-compliance continues for over one year the amount of fine per day will double to ?10,000 and such companies may even face compulsory de-listing of their shares from stock exchanges. Stock exchanges have been asked to share all the details of non-compliant companies on their website.

“Mandating penalties for non-compliance of MPS norms will surely act as a deterrent for the violators,” said Anjali Aggarwal, Partner & Head, Capital Market & Stock Exchange Services at Corporate Professionals, a law firm.