Penalty for Non-compliance of Shareholding Norms Fixed by SEBI

Published on October 13, 2017
Market regulator SEBI has announced to impose the penalty if a company violates the minimum public shareholding (MPS) norms.

  • SEBI will restrict promoters’ rights in decision making of the company
  • At least 25% public shareholding is required for a listed company by MPS

Important Things

  • Share depositories will freeze the entire shareholding of the promoters if a company fails to comply with the MPS norms for 15 days. 
  • The directors of the company will also be barred from holding such positions in other companies till the non-compliant company achieves 25% public shareholding. 
  • Monetary penalty of Rs5,000 per day for non-compliance of the norms
  • The per-day penalty will rise to Rs10,000 if non-compliance continues for a year.
  • All the securities held by the promoter would be frozen.
  • The stock exchanges are ordered to publish the names of the non-compliant companies, the amount of fine imposed on the defaulters, the days of non-compliance and the action taken against the promoters.

About SEBI

  • It stands for Securities and Exchange Board of India
  • It was established in the year 1988 
  • It was given statutory powers on 30 January 1992 through the SEBI Act, 1992
  • Ajay Tyagi is the current Chairman
  • The chairman is nominated by Union Government of India.
  • Two members are Officers from Union Finance Ministry.
  • One member is appointed by Reserve Bank of India.
  •  The remaining five members are nominated by Union Government of India, out of them at least three shall be whole-time members.


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