On Monday, the Securities and Exchange Board of India (SEBI) proposed a change in the minimum threshold for voting rights for re-classification of a promoter as a public shareholder and suggested all promoter entities disclose shareholding even in case of 'nil' holding.
Under the proposal, the market regulator said the re-classification condition on shareholding should be amended such that the promoter and related persons seeking re-classification should not together hold 15% or more of the total voting rights in the listed entity.
At present, the minimum threshold requirement is 10%.
SEBI received feedback from market participants to review the current threshold of 10% so that the persons who may have been promoters but are no longer in day-to-day control, having shareholding of less than 15%, may "opt-out" from being classified as promoters, without having to reduce their shareholding.
The regulator said it received feedback regarding cases where promoters have desired re-classification but have found it difficult under the current regulatory regime.
Relaxation from existing requirement on a case-to-case basis has been given by SEBI and the existing provisions should be revisitied to minimise the number of exemptions provided on a case-to-case basis, the regulator said in a consultation paper.
Also, exemption from the procedure for re-classification should be granted to existing promoters in cases where such re-classification is pursuant to an open offer.