{"id":47539,"date":"2021-03-16T13:03:33","date_gmt":"2021-03-16T07:33:33","guid":{"rendered":"https:\/\/enterslice.com\/learning\/?p=47539"},"modified":"2021-03-16T13:03:36","modified_gmt":"2021-03-16T07:33:36","slug":"sebis-proposal-for-recalibration-of-threshold-for-minimum-public-shareholding-norms-on-relisting","status":"publish","type":"post","link":"https:\/\/enterslice.com\/learning\/sebis-proposal-for-recalibration-of-threshold-for-minimum-public-shareholding-norms-on-relisting\/","title":{"rendered":"SEBI’s Proposal for “Recalibration of Threshold for Minimum Public Shareholding Norms on Relisting”"},"content":{"rendered":"

As a measure to provide sufficient float in a listed entity post- corporate insolvency resolution process (CIRP), the Securities & Exchange Board of India (SEBI<\/strong>), has on 19 August 2020, released a consultation paper titled ‘Recalibration of threshold for minimum public shareholding (MPS<\/strong>) norms, enhanced disclosures in corporate insolvency resolution process (CRIP) cases’.<\/p>\n\n\n\n

The article focuses on the key recommendations highlighted in the consultation paper on Recalibration of threshold for Minimum Public Shareholding norms in light of the Ruchi Soya case.<\/strong><\/p>\n\n\n\n

Let us know see what really happened in Ruchi soya case.<\/p>\n\n\n\n

Ruchi Soya Case and the need of revision in Minimum Public Shareholding (MPS)<\/h2>\n\n\n\n

Ruchi Soya’s company shares were acquired by Patanjali Ayurved Ltd. in December, 2019 as a part of CRIP and were relisted in January 2020 at Rs. 17 per share.  Within 5 months of relisting, the share prices hiked to Rs. 1535 per share on 29th<\/sup> June 2020, which is equal to 8929% increase. The rise in share price happened even after additional preventive surveillance actions were taken by the regulatory body, which includes reduction in price band & moving the scrip into trade for trade segment.<\/p>\n\n\n\n

This resulted in market<\/a> capitalization of Ruchi Soya from Rs. 4350 crores to Rs. 45000 crores in just 5 months. This hike was even higher than the market capitalization in companies like Ambuja Cement, Tata Steel, and Bharti Infratel.<\/p>\n\n\n\n

One of the reasons behind such a hike is low level of free float, which means the shares left for the public to trade is very less. The shares available for public trade are even less than 1%, as Patanjali holds 99.03% after CRIP. This resulted in high demand and in turn resulted in increase in share price.<\/p>\n\n\n\n

The Proposed Changes in Minimum Public Shareholding norms<\/h2>\n\n\n\n

The market regulator has proposed three changes to the existing Minimum Public Shareholding norms for companies aspiring to relist post-CIRP. <\/p>\n\n\n\n