Listing norms relaxed for companies with market capitalization above Rs 1 lakh crore
The Department of Economic Affairs, which comes under the Ministry of Finance, has amended the Securities Contracts (Regulation) Rules. This move will benefit the government during the proposed IPO of Life Insurance Corporation of India (LIC). Such entities will have to increase their public shareholding to 10 per cent in two years and at least 25 per cent in five years. Yash Ashar, partner and head (capital markets) at legal services provider Cyril Amarchand Mangaldas said companies with a market capitalization of more than Rs 1 lakh crore at the time of listing should limit their IPOs to five per cent (as against 10 per cent). And it will be convenient for them. This will be possible with the latest amendment.
In India, 10000 startups were listed in 180 days, the total number of recognized startups increased to 50 thousand, the notification of amendment in the rules was issued on 18 June. However, this amendment will not affect most of the issuances in India. This is a progressive amendment, which has been done keeping in mind that the companies of India are now bigger than before. Last month, the Securities and Exchange Board of India (SEBI) had relaxed some rules to encourage startup companies to list shares in the market. This includes reduction in the holding period for holding capital before issue of shares and the flexibility of the company to allot up to 60 percent of the shares at its sole discretion to eligible investors of this market platform. The new rules have come into effect from May 5. The central government has simplified the listing rules for companies having a market capitalization of more than Rs 1 lakh crore at the time of listing. According to the latest amendment, such companies will now be able to sell only five percent of their shares in the market. In fact, there were concerns that it might be challenging to offer for sale of 10 per cent of the shares in very large IPOs (initial public offerings) in the future. Therefore, the government decided to relax the rules.
