(First published on Linkedin)
Securities Contracts (Regulation) Rules, 1957 has been amended recently so as to reduce the minimum public shareholding requirement to 10% from 25% in case an unlisted company seeks direct listing in IFSC.
Traditionally, companies were required to maintain a minimum public shareholding of 25% for listings, aligning with global standards but may be seen as a barrier for raising capital through an IPO due to the MPS requirements, especially companies which are in the growth phase. This relaxation should provide an attractive “light touch” regime for unlisted companies seeking to raise capital through listing.
Key Takeaways:
1. Reduced Compliance Burden: The lowering of the MPS requirement to 10% eases the compliance burden on companies, allowing them to retain a higher proportion of their equity while still accessing public capital markets.
2. Increased Flexibility: Companies now have more flexibility in managing their equity structure and strategizing for long-term growth, making IFSCs a more attractive option for listing.
3. Encouragement for Unlisted Companies: This change is expected to encourage more unlisted companies, particularly from sectors like fintech, insurance, and global trading, to explore the advantages of an IFSC listing.