By CKG Nair

The minimum public offer (MPO) and the minimum public shareholding (MPS) norms are seeing yet another round of interesting changes. One of the important regulatory-policy steps taken by the Securities and Exchange Board of India (Sebi) board on September 12 is to go for a fine, granular calibration of these norms. Both the minimum offer in the initial public offering (IPO) and the time frame for eventually reaching the 25% level have been relaxed considerably for companies with high market capitalisation, post-IPO. However, the new norms are only Sebi’s recommendations to the ministry of finance which has to notify them as amendments to the Securities Contract (Regulation) Rules, 1957 (SCRR), in order to be effective.

There is no change in existing norms for small- and medium-cap companies up to a post-issue market capitalisation of Rs 50,000 crore. Companies above this threshold are split into three categories: Rs 50,000-1 lakh crore; Rs 1-5 lakh crore; and more than Rs 5 lakh crore market capitalisation post-IPO.

For category 1, the MPO has to be the higher than Rs 1,000 crore or 8% of the post-issue market capitalisation; for category 2, Rs 6,250 crore (2.75% of post-issue market capitalisation); for category 3, Rs 15,000 crore and at least 1% of the post-issue market capitalisation, subject to a minimum dilution of 2.5% equity. The time frame for reaching MPS of 25% in all these categories also has been revised upwards, broadly from three/five years to five/10 years.

Clearly, Sebi’s proposals are enablers for the big unlisted companies, reportedly waiting in the wings to enter the public market. It is up to the........

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