SEBI Relaxes MPS Compliance Norms: What You Need to Know?

The capital market regulator, SEBI has eased enforcement of minimum public shareholding (MPS) requirements, offering relief to listed companies struggling to meet the mandated 25% public shareholding threshold within specified timelines.

The regulator acknowledged representations from industry bodies highlighting difficulties in achieving compliance due to volatile market conditions, partly driven by geopolitical tensions in the Middle East.

No Penal Action for Now

SEBI has instructed stock exchanges and depositories not to initiate penal actions, such as fines or freezing of promoter shareholdings, for companies with MPS compliance deadlines falling between April 1 and September 30, 2026. It also clarified that any penalties imposed during this period will be withdrawn, providing temporary relief to affected firms.

SEBI’s Consideration

SEBI said in consultation paper, “Considering the above representation and the prevailing market conditions, it has been decided to grant one-time relaxation from the applicability of penal provisions under the Master Circular for listed entities whose due date for compliance with MPS requirements falls during the period from April 1, 2026, to September 30, 2026.” 

Accordingly, recognised stock exchanges and depositories are advised not to take any penal action as envisaged under the Master Circular against such entities for non-compliance during the said period. Further, any penal actions initiated by the stock exchanges or depositories against such listed entities for non-compliance with MPS requirements during the period from April 1, 2026, till date may be withdrawn.

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