Module: | SEBI LODR & Corporate Governance Frameworks
Q11: Consider the following statements regarding the Minimum Public Shareholding (MPS) norms mandated by SEBI as of 2025:
1. All listed companies must maintain a minimum public shareholding of 25 percent to ensure adequate market liquidity.
2. A newly listed company must achieve the 25 percent MPS compliance within a maximum period of three years from the date of listing.
3. Companies are allowed to temporarily delist their shares if they fail to meet the MPS criteria within the specified timeline.
Which of the above statements is/are correct?
2. A newly listed company must achieve the 25 percent MPS compliance within a maximum period of three years from the date of listing.
3. Companies are allowed to temporarily delist their shares if they fail to meet the MPS criteria within the specified timeline.
Which of the above statements is/are correct?
✅ Correct Answer: A
🎯 Quick Answer:
A. Only 1 and 2 are correct.Structural Breakdown: Statement 1 is correct; 25% is the baseline.
Statement 2 is correct.
Statement 3 is incorrect; failing to meet MPS results in severe penalties, not voluntary delisting.
Historical/Related Context: SEBI introduced the 25% rule to prevent price manipulation in stocks with low free-float.
Causal Reasoning: High promoter holdings restrict market depth; MPS ensures accurate price discovery.