Government Exempts Listed PSUs From Minimum Public Shareholding Norms Until August 2026

The Union government has exempted all state-run listed companies from meeting the minimum public shareholding (MPS) norms for two years until August 2026, according to an office memorandum from the Department of Economic Affairs.

"The Securities and Exchange Board of India (SEBI) is requested to take further necessary action and bring this to the notice of the stock exchanges concerned," stated the memorandum reviewed by ET.

SEBI regulations require all listed companies, including state-owned ones, to maintain at least 25 per cent public shareholding for continuous listing. This MPS rule was first implemented after the 2010 amendment to the Securities Contracts (Regulation) Rules (SCRA) by SEBI.

Under this rule, newly listed companies have a three-year window to comply, while companies with a post-issue market capitalisation exceeding Rs 1 trillion have a five-year timeline to meet the 25 per cent MPS requirement.

In January 2023, the Finance Ministry notified changes to the SCRA rules, allowing the central government to exempt a PSU from achieving and maintaining public shareholding in the public interest.

The exemption will benefit several state-run firms, especially lenders such as UCO Bank, Central Bank, Bank of Maharashtra where government holdings have expanded in recent years due to frequent capital infusions in the wake of the bad loan crisis. However, many of the larger state-run banks are already compliant with these norms.