Govt grants LIC one-time exemption from 25% public shareholding rule
NEW DELHI: The Centre has granted Life Insurance Corporation of India (LIC) a one-time exemption from the 25% minimum public shareholding (MPS) rule. This means that the Government of India will continue to hold more than 75% stake in the insurance behemoth for the next eight-nine years.
The current MPS rule specifies that a listed entity with a market capitalisation (m-cap) of more than Rs 1 lakh crore should have a minimum 25% public shareholding within five years of listing. For firms which have lower m-cap, they are required to have a minimum 25% public shareholding within a year of listing. LIC, which had launched the biggest IPO in India’s capital market history, entered the bourses on May 17, 2022. This meant it had to meet the 25% criteria by May 2027. However, with the extension, it would now have to meet the MPS rule by May 2032.
“Pursuant to Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, this is to inform you that the Department of Economic Affairs, Ministry of Finance vide Office Memorandum dated December 20, 2023 has decided in the public interest, to grant one-time exemption to Life Insurance Corporation of India to achieve 25% minimum public shareholding (MPS) within 10 years from the date of listing i.e., till May 2032 under Rule 19A (6) of the Securities Contract (Regulations) Rules (SCRR) 1957,” LIC said in a regulatory filing on Thursday.
Currently, LIC has a m-cap of Rs 4.84 lakh crore and the Government of India, the company’s largest stakeholder, holds a 96.50% stake in the company. Public shareholding in LIC stands at only 3.50%.
LIC shares have seen a big recovery, gaining over 27% since start of November.
On Thursday, the share closed at Rs 767 apiece. The share took a beating earlier this year when it hit its all-time low of Rs 530 apiece. This was a steep fall from its issue price of Rs 949 apiece. Axis Securities in a recent note said LIC stock has successfully breached its ‘multiple resistance zone’ at Rs 754, indicating a positive bias in its current trajectory.