Minimum Public Shareholding (MPS)

SEBI has recently proposed more flexibility in the rules around Minimum Public Shareholding (MPS) and Minimum Public Offer (MPO) for companies looking to get listed. The aim is to simplify the fundraising process for issuers in India, encouraging easier access to capital markets.

What is Minimum Public Shareholding (MPS)?

MPS is a SEBI regulatory requirement under the Securities Contracts (Regulation) Rules, 1957 and the Listing Obligations and Disclosure Requirements (LODR).
It requires at least 25% of a listed company’s equity shares to be held by the public (non-promoters).
If promoters hold more than 75%, they must reduce their holding to meet this threshold.
Promoters can do this by:
- Placing shares with institutional investors
- Issuing rights shares to the public, thereby diluting their stake

Objectives of MPS Rule

Improve market liquidity
Promote fair price discovery
Ensure broader participation and strengthen corporate governance

Compliance Deadlines

Newly listed companies must comply within 3 years of listing.
Companies with a market cap over ?1 trillion get 5 years to meet the 25% MPS.
If public shareholding falls below 25%, companies have 12 months to restore it.

Why This Matters

SEBI’s push to make these rules more flexible is aimed at easing capital raising while maintaining market integrity.
It helps companies grow by making compliance more manageable.

Source: INDIAN EXPRESS

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