PRESS RELEASE

PR – 108/2005

Minimum public shareholding requirements revised

Norms for QIB participation in book built issues revised

Presently listed companies are required to maintain their public shareholding at a level that was required at the time of initial listing. The minimum public shareholding requirement, therefore, varied in accordance with the provisions applicable at the time of initial listing of the company. In a  meeting of the Securities and Exchange Board of India held here today, it has been decided to revise the above provisions related to minimum public shareholding as follows:

(1)    All listed companies will be required to maintain atleast 25% shareholding with public for the purpose of continuous listing.

(2)    This will not, however, be applicable to companies which are permitted to make an Initial Public offer (IPO) of atleast 10% to public in terms of Rule 19(2)(b) of Securities Contracts (Regulation) Rules, 1957 (SCRR). Such companies will be required to maintain atleast 10% public shareholding for the purpose of continuous listing.

(3)    The aforesaid minimum public shareholding requirement will not be applicable to Government companies, infrastructure companies and companies registered with Board for Industrial Financial Restructuring (BIFR).

(4)    Listed companies, which are not presently  complying with the minimum public holding requirement as mentioned above, will be given a period of two years, for compliance, from the date of issuance of circular in this regard.

(5)    Listed companies which may in future fall short of the requisite minimum level as mentioned above on account of reasons like Corporate Debt Restructuring (CDR) packages etc. will be given a period of one year , for compliance, from the date of non - compliance.

The objective is to ultimately reach a single level of minimum public shareholding requirement for listed companies, in course of time. However, no time frame has been envisaged at this stage.

Qualified Institutional Buyers (QIB) – participation in book built issues

It has been decided in respect of participation of QIBs in book built issues that following measures should, henceforth, be implemented:

1. QIBs shall bring at least 10% margin while submitting the bids.
2. The allotment of shares to QIBs shall be on proportionate basis.
3. Out of the existing 50% portion available for QIBs, 5% thereof shall be specifically available for Mutual Funds registered with SEBI. However, these Mutual Funds participating in QIB category will also be eligible for allotment in the remaining portion, i.e 45%, available to QIBs.

Detailed circulars are being issued separately.

Mumbai

August 26, 2005