LIC's mega IPO: paves way for companies with market cap of over Rs 1 lakh crore

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MUMBAI: The rules for listing shares have been amended to ease the way for LIC-Life Insurance Corporation of India's proposed mega IPO. Companies with a market capitalization of over Rs 1 lakh crore will now be able to be listed through sale-disinvestment of five per cent shares.

Of course, companies with such a market capitalization will have to increase their public shareholding to 10 per cent in two years and 5 per cent in five years after the sale of five per cent shares. The Securities Contracts (Regulation) Rules have been amended by the Department of Economic Affairs under the Ministry of Finance.

Of course, capital market and legal experts believe that it is very challenging to sell a 10 per cent holding in a very large IPO. With this improvement, companies with a market capitalization of over Rs 1 lakh crore will now be able to make offers for five per cent of the shares instead of 10 per cent and there will be time to reduce further holdings.

These balanced reforms have been made by the government. Companies with a market capitalization of over Rs 1 lakh crore will have to hold 10 per cent public shareholding in two years of listing and 5 per cent public holding in five years.

It is also to be noted that with this amendment there will be no change for most of the issues in India, the benefit of this amendment will go only to the Government of India for LIC's proposed IPO. In February this year, the SEBI board approved relaxation of minimum public offering standards for large size issuers.

In the meantime, with this new amendment to the rules, as a result of the implementation of a valid resolution plan under section 21 of the Insolvency and Bankruptcy Code, 2017, each listed company will be required to maintain a minimum public share holding of five per cent.


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