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Life Insurance Corporation of India (LIC) will get time till May 2032 to comply with Minimum Public Shareholding (MPS) norms prescribed by the Securities and Exchange Board of India (SEBI).
As of September 30, 2023, the government owns 96.5 per cent in LIC. “Pursuant to Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, this is to inform you that the Department of Economic Affairs, Ministry of Finance, vide Office Memorandum dated December 20, 2023, has decided, in the public interest, to grant one-time exemption to Life Insurance Corporation of India to achieve 25 per cent Minimum Public Shareholding (MPS) within 10 years from the date of listing, i.e., till May 2032, under Rule 19A (6) of the Securities Contract (Regulations) Rules (SCRR) 1957,” a stock exchange filing by LIC on Thursday said.
The provision
The government divested 3.5 per cent of its shareholding in LIC last year, and accordingly, it got listed on stock exchanges. Rule 19A of the Securities Contract Regulation Rules says every listed company, other than a public sector company, shall maintain a public shareholding of at least 25 per cent. Such a company will get three years from the date of listing to ensure MPS. Such a provision aims to bring more public as shareholding. The public can be an individual or an institution.
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Earlier this year, Finance Ministry said a listed public sector undertaking will continue to be exempt from MPS norm for a ‘specified period,’ It was said that the Central Government may, in the public interest, exempt any listed entity in which the Central Government, State Government, or public sector company, either individually or in any combination with others, hold directly or indirectly, the majority of the shares, voting rights, or control of such listed entity from any or all of the provisions of this rule.
It was also said that the exemption shall continue to be valid for the period specified, irrespective of any change in control of such listed entity subsequent to the issuance of such exemption.
Although such a provision was prescribed mainly to facilitate strategic disinvestment of CPSU, it appears that the Economic Affairs Department used the same for exempting LIC. It may be noted that none of the listed CPSUs have been strategically divested since the January notification of exemption.
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