However, shareholders would be allowed to issue a self certification of their ‘fit’ status.
In the circular, the regulator said exchanges should make sure all shareholders are fit and proper. At the time of listing, every shareholder would need to give a declaration that would be part of the contract note at the layer stage. After listing, stock exchanges would need to issue a quarterly disclosure of the fit status of all shareholders.
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However, there are additional stipulations for shareholders who acquire above two per cent. They would have to seek approval from the regulator within 15 days of acquisition. Shareholders who intend to acquire beyond five per cent would have to take a prior approval from Sebi.
The regulator had asked depositories to put in place a mechanism to generate alerts when such holding exceeds two per cent.
According to legal experts, not putting a minimum threshold for fit and proper would lead to compliance hurdles for stock exchanges.
“Not putting a minimum threshold doesn't serve any purpose as these holdings would be insignificant to make a difference. Ensuring that every shareholder is 'fit' would lead to unnecessary paper work and compliance hurdles,” said Tejesh Chitlangi, partner, IC Legal.
The regulator said listed the stock exchange should ensure 51 per cent of its shareholding is held by the public at all times.
“Such listed exchange entities need to provide category-wise break up of the details on the continuous basis. Depositories are advised to put in place systems capturing shareholding data of trading members or their associates whose shareholding should not exceed 49 per cent at any given point of time,” Sebi noted.
Further, the trading members or their associates should obtain prior approval of the listed exchange for further acquisition of shares, once their aggregate shareholding crosses the limit of 45 per cent. Failing to do this will trigger consequential action by depositories such as freezing of voting rights and taking away all corporate benefits.