India has reduced the ratio of shares sold by big companies while listing on the stock exchange, which has opened the way for National Stock Exchange and Reliance Jio to launch IPO. The regulator had proposed last year that the minimum amount of shares that big companies have to offer in their IPOs should be halved. Under this, after listing, companies with a value of more than Rs 5 lakh crore ($57 billion) will be able to sell only 2.5 percent of their ‘paid-up capital’. The government has now formally notified it, due to which this rule has come into force. These changes have been issued late Friday night. Let us also tell you what kind of changes have been made by the regulator in the rules?
The regulator made these important changes
- A minimum of 2.5 per cent of each category of equity shares can be offered to the general public.
- A mandatory ‘glide path’ (time limit) has been fixed to reach 25 percent public shareholding. Companies whose public shareholding is less than 15 percent at the time of listing will get 5 years to reach 15 percent and 10 years to reach 25 percent.
- If the ‘public float’ (shares available in the market) at the time of listing is more than 15 per cent, the company will get 5 years to reach 25 per cent.
- For companies whose market capitalization is between Rs 1 lakh crore and Rs 5 lakh crore, the minimum public float has been fixed at 2.75 percent.
- For companies whose market capitalization is between Rs 50,000 crore and Rs 1 lakh crore, the minimum public float has been fixed at 8 percent.
- Other provisions also include a condition that if a company, which has any category of equity shares with ‘superior voting rights’, lists its ‘ordinary shares’, it must mandatorily list the shares with ‘superior voting rights’ also.