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TMI BlogConditions for re-classification of any person as promoter / publicX X X X Extracts X X X X X X X X Extracts X X X X ..... e a request for reclassification to the listed entity along with a rationale for the request and a description as to how the conditions specified in clause (b) of this sub-regulation (3) are satisfied; (ii) the board of directors of the listed entity shall analyze such request which is compliant with the conditions specified in clause (b) of sub-regulation (3) and provide their views in the immediate next board meeting or within two months from the date of receipt of the request from its promoter(s), whichever is earlier; (iii) the listed entity shall submit an application seeking no-objection of the recognized stock exchange for such reclassification request along with the views of the board of directors within five days of consideration of the request by the board of directors; (iv) the recognized stock exchange shall decide on such application(s) within a period of thirty days, excluding the time taken, if any, by the listed entity to respond to queries of stock exchanges, from the date of receipt of the application: Provided further that in case of entities that are listed on more than one recognized stock exchange, the concerned stock exchanges shall jointly decide on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Board, the stock exchanges or the depositories. (4) The promoter(s) seeking re-classification, subsequent to re-classification as public, shall comply with the following conditions: (a) he 3[/she] shall continue to comply with conditions mentioned at sub-clauses (i), (ii) and (iii) of clause (b) of sub-regulation 3 as specified above at all times from the date of such re-classification failing which, he 3[/she] shall automatically be reclassified as promoter/ persons belonging to promoter group, as applicable; (b) he 4[/she] shall comply with conditions mentioned at sub-clauses (iv) and (v) of clause (b) of sub-regulation 3 for a period of not less than three years from the date of such re-classification failing which, he 4[/she] shall automatically be reclassified as promoter/ persons belonging to promoter group, as applicable. (5) If any public shareholder seeks to re-classify itself as promoter, it shall 11[****] make an open offer in accordance with the provisions of Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 12[and the intention to get reclassified as a promoter shall be disclosed in the letter of offer]. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6[(10) In case of reclassification pursuant to an open offer or a scheme of arrangement, the provisions of clause (a) of sub-regulation (3) and 18[****] sub-regulation (8) of this regulation shall not apply if the intent of the erstwhile promoter(s) to reclassify has been disclosed in the letter of offer or scheme of arrangement 19[and subject to-] 20[(i) compliance with clauses (b) and (c) of sub-regulation (3) of this regulation, and (ii) disclosure of reclassification within twenty-four hours of completion of open offer or scheme of arrangement:] Provided that the provisions of clause (c)(i) of sub-regulation (3) of this regulation shall not apply in case of reclassification pursuant to an open offer.] 21[Explanation I: For the purpose of this sub-regulation, completion of open offer shall mean: (i) the date of actual transfer of shares from the promoter seeking reclassification to the new acquirer, or (ii) the date on which the new acquirer takes control of the listed entity, whichever is later. Explanation II: For the purpose of this sub-regulation, completion of scheme of arrangement shall mean the date on which shares are credited to all eligible shareholders of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ic shareholders subject to approval of the shareholders in a general meeting. Explanation.- For the purposes of this sub-regulation an entity may be considered as professionally managed, if- (i) No person or group along with persons acting in concert taken together shall hold more than one per cent paid-up equity capital of the entity including any holding of convertibles/outstanding warrants/ Depository Receipts: Provided that any mutual fund, bank, insurance company, financial institution, foreign portfolio investor may individually hold up to ten per cent paid-up equity capital of the entity including any holding of convertibles/outstanding warrants/Depository Receipts. (ii) The promoters seeking reclassification and their relatives may act as key managerial personnel in the entity only subject to shareholders' approval and for a period not exceeding three years from the date of shareholders' approval. (iii) The promoter seeking reclassification along with his promoter group entities and the persons acting in concert shall not have any special right through formal or informal arrangements. All shareholding agreements granting special rights to such outgoing entities shall b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ionale for seeking such re-classification and how the conditions specified in clause (b) below are satisfied; (ii) the board of directors of the listed entity shall analyze the request and place the same before the shareholders in a general meeting for approval along with the views of the board of directors on the request: Provided that there shall be a time gap of at least three months but not exceeding six months between the date of board meeting and the shareholder's meeting considering the request of the promoter(s) seeking re-classification. (iii) the request of the promoter(s) seeking re-classification shall be approved in the general meeting by an ordinary resolution in which the promoter(s) seeking re-classification and persons related to the promoter(s) seeking re-classification shall not vote to approve such re-classification request." 3. Inserted vide Notification No. SEBI/LAD-NRO/GN/2021/22 dated 05-05-2021 4. Inserted vide Notification No. SEBI/LAD-NRO/GN/2021/22 dated 05-05-2021 5. Substituted vide Notification No. SEBI/LAD-NRO/GN/2021/22 dated 05-05-2021 before it was read as "(9) The provisions of sub-regulations 3, 4 and clauses (a) and (b) of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one month but not exceeding three months between the dates of the board meeting and the shareholders' meeting considering the request of the promoter(s) seeking reclassification. (iii) the request of the promoter(s) seeking reclassification has been approved in the general meeting by an ordinary resolution in which the promoter(s) seeking reclassification and the persons related to him/her/it have not voted to approve such reclassification request: Provided that the provisions of this sub-clause shall not apply in cases: (a) where the promoter(s) seeking reclassification and persons related to the promoter(s) seeking reclassification, together, do not hold more than one percent of the total voting rights in the listed entity; (b) where reclassification is pursuant to a divorce.]" 11. Omitted vide Notification No. SEBI/LAD-NRO/GN/2024/218 dated 12-12-2024 w.e.f. 12-12-2024 before it was read as, "be required to" 12. Inserted vide Notification No. SEBI/LAD-NRO/GN/2024/218 dated 12-12-2024 w.e.f. 12-12-2024 13. Substituted vide Notification No. SEBI/LAD-NRO/GN/2024/218 dated 12-12-2024 w.e.f. 12-12-2024 before it was read as, "minutes" ..... 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