New Sebi rules for promoters to reclassify as shareholders
New Delhi: Markets regulator Securities and Exchange Board of India on Tuesday came out with proposals to simplify existing framework on re-classification of promoters as public shareholders.
It has been proposed that if a promoter plans to be re-classified as a public shareholder, then the entity needs to first apply to the listed company.
The listed firm would then seek the approval of the board and minority shareholders on the resolution.
Under the proposal, in all cases of re-classification of promoters, including the recommendation of the board, would be required to be placed by the listed entity before the shareholders in a general meeting and approved through an ordinary resolution.
"In order to avoid conflict of interest, it is proposed that the specific promoter who has requested such reclassification, its promoter group and persons acting in concert shall not be permitted to vote on such resolution," Securities and Exchange Board of India said in a draft papers.
Further, the listed entity should ensure a time gap (a cooling off period) of at least six months between the date of board and shareholder's meeting considering the request of the promoter.