The Securities and Exchange Board of India (“SEBI”) on 23rd November, 2020 has released a Consultative paper on re-classification of promoter / promoter group entities and disclosure of promoter group entities in the shareholding pattern and has invited comments from the general public on it before 24th December, 2020.
SEBI received feedback regarding cases where promoters have desired re-classification but found it difficult under current regulatory regime. So, relaxation from existing requirement on a case to case basis was given by SEBI. It is therefore desirous that the existing provisions may be revisited to minimize the number of exemptions provided on a case to case basis.
The following are the proposals with respect to review of reclassification of the promoter / promoter group entities as public shareholder –
1. Conditions pertaining to minimum voting rights;
2. Time period between board and shareholders meeting;
3. Reclassification pursuant to an order/ direction of Government / regulator;
4. Reclassification of existing promoter pursuant to open offer;
5. Time period for listed companies to place the reclassification request before board;
6. Disclosure of names of promoter group entities in the shareholding pattern
SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“Regulation”) provides for conditions with respect to re-classification of any person as promoter / public. A detailed review of the Regulation was undertaken in 2018, with an aim to simplify, streamline and bring greater clarity in the provisions specified therein. In this regard, certain provisions that were prone to misuse were also strengthened.
Considering the implications of the matter as stated above on the market participants including listed companies, promoters / promoter group of the said companies and investors, comments on the policy framework is proposed. Comments / suggestions are invited as per the format given below –
|Name of entity / person / intermediary/ Organization:|
Comments may be sent by email to firstname.lastname@example.org or by post to the following address not later than December 24, 2020:
Corporation Finance Department, CMD-II,
Securities and Exchange Board of India
SEBI Bhavan, Plot No. C4-A, “G” Block,
Bandra Kurla Complex, Bandra (East),
Mumbai – 400 051