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Cos under CIRP: Shareholding norms revised

Sebi board meet: Regulator also paves way for fintechs to set up mutual funds.

By: ENS Economic Bureau | Mumbai | December 17, 2020 3:06:41 am
The regulator, in its board meeting, decided that even sponsors that don’t meet the profitability criteria can apply for mutual fund (MF) licenses.

The Securities and Exchange Board of India (Sebi) on Wednesday revamped the shareholding norms for companies relisting after undergoing the corporate insolvency resolution process (CIRP) to ensure fair price discovery. The markets regulator also paved the way for fintech companies and other startups to set up asset management companies (AMCs) — or mutual funds — by revising the eligibility criteria.

The regulator, in its board meeting, decided that even sponsors that don’t meet the profitability criteria can apply for mutual fund (MF) licenses. This move will enable fintechs that are looking at entering the mutual fund (MF) industry to seek MF licences. However, the fintech company will have to demonstrate the existence of a Rs 100 crore net-worth in the mutual fund, till it records five years of continuous profitability.

Sebi also asked companies that continue to remain listed as a result of implementation of the insolvency resolution plan to have at least 5 per cent public shareholding at the time of beginning of trading on the stock exchanges.

Further, for such companies, Sebi has provided 12 months to achieve public shareholding of 10 per cent from the day of re-listing of such shares and 36 months to achieve public shareholding of 25 per cent from the said date.

Currently, during corporate insolvency resolution process (CIRP) where the public shareholding falls below 10 per cent, such listed companies are required to bring public shareholding to at least 10 per cent within 18 months and to 25 per cent within 36 months.

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