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.
