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Indian government has granted a concession to the Life Insurance Corporation of India (LIC), allowing the insurer to achieve a 25% Minimum Public Shareholding (MPS) within 10 years. LIC, country’s largest insurer, went public in May 2022. During the IPO, government sold a 3.5% stake through an Initial Public Offering (IPO). Currently, the government holds 96.5% stake in LIC.
Today, LIC shared in a stock exchange filing that the Department of Economic Affairs has given them a one-time exemption. LIC has to reach the 25% Minimum Public Shareholding (MPS) requirement in this extended time by May 2032. This exemption is part of a new rule allowing state-run companies, including banks, to be exempted from the 25% MPS rule after privatization if it’s considered in the “public interest. LIC, which made its stock market debut on May 17, 2022, was initially required to meet the 25% MPS rule by 2027. However, the recent government decision grants a 10-year extension, allowing LIC to achieve the stipulated MPS by May 2032.
SEBI Regulations
SEBI, the capital markets regulator, mandates that issuers with a post-issue market capital exceeding ₹100,000 crore must achieve a minimum public float. These issuers are required to achieve at least 10% public shareholding within two years and 25% within five years from the date of listing. In the last month, LIC stock has surged by 25%, and over the past six months, it has delivered a 20% return. However, the stock has given a 7% negative return since its listing. Government’s decision to grant LIC a one-time exemption provides flexibility for the insurer to meet the 25% MPS requirement by May 2032, aligning with SEBI regulations and enhancing investor appeal. Happy investing and thank you for reading! Disclaimer: This website content is only for educational purposes, not investment advice. Before making any investment, it’s important to do your own research and be fully informed. Investing in the stock market includes risks, and you should carefully read the Risk Disclosure documents before proceeding. Please remember that past performance doesn’t guarantee future results, and due to market fluctuations, your investment goals may not always be achieved.
