Paving the way for stock exchanges to list, SEBI on Monday outlined the broad guidelines for an initial public offering (IPO) by bourses. The securities market regulator has made it mandatory for stock exchanges to ensure that the minimum public shareholding is at least 51 per cent.

Trading members, associates and agents can hold the balance 49 per cent. Both BSE and NSE are looking to float an IPO with the former already seeking SEBI’s approval for the listing.

The regulator has also permitted listing of depositories, which will be governed by the same norms as those applicable to stock exchanges.

This could help BSE and NSE reduce their shareholding in Central Depository Services Ltd (CDSL) and National Securities Depository Ltd.

BSE holds 54.2 per cent in CDSL and has to pare its stake as per a SEBI directive asking stock exchanges to lower their holdings in depositories to 24 per cent. The three-year deadline has expired and both the BSE and the NSE are looking for investors.

Fit and proper criteria On the fit and proper criteria for an investor in a stock exchange, SEBI said that every investor should make a self-declaration of being fit and proper at the time of applying for an exchange’s IPO or OFS.

Depositories have been given the responsibility of monitoring the shareholding threshold of various categories (2 per cent – for individuals, 5 per cent – foreign entities or 15 per cent for banks /financial institutions)

SEBI has also relaxed delisting norms for small companies. Currently, one pre-condition for de-listing is that the shares of the company should not have been traded for the preceding year.

Now, small companies, whose trading of equity shares during the 12 calendar months is less than 10 per cent of the total number of shares of such company, will also be eligible.

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