MUMBAI: The Securities and Exchange Board of India (SEBI) on Thursday directed the stock exchanges to amend the listing agreements to ensure that companies which have issued shares to the public to the extent of less than the prescribed minimum (of 25 per cent or ten percent, as applicable) fulfil the applicable minimum public holding within two years at the latest.

It has also amended the reporting formats relating to the shareholding pattern and on compliance with regulations on minimum public holding.

According to the revised Clause 40A of the Equity Listing Agreement announced by SEBI, where a company offers or has in the past offered a particular class or kind of its shares to the public to the extent of at least 10 per cent of the issue size in terms of Rule 19(2) (b) of the Securities Contracts (Regulations) Rules, 1957, it should agree to maintain on a continuous basis public shareholding of at least ten per cent of the total number of issued shares of such class or kind.

Market capitalisation

Where the number of outstanding listed shares of any class or kind of the company are two crore or more and the market capitalisation of such company in respect of shares of such class is Rs 1,000 crore or more, it should maintain on a continuous basis public shareholding of at least ten per cent of the total number of issued shares of such class or kind.

Where, as on May 1, 2006, the shares of a particular class or kind issued by the company are listed and the public shareholding in respect of shares of such class or kind is less than 25 per cent or ten per cent, as the case may be, of the total number of issued shares of such class or kind, the company shall agree to increase the public shareholding in respect of shares of such class or kind to 25 per cent or ten per cent, as the case may be, "within such period as may be approved by the Specified Stock Exchange (SSE) but not exceeding two years from the said date".

SEBI said it would provide a transparent mechanism to non-compliant companies for enabling them to "graduate to the level of compliant companies".

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