LIC gets a 10-year exemption from the 25% public shareholding rule
21 Dec 2023
In a significant development, the state-owned Life Insurance Corporation of India (LIC) announced on Thursday, 21 December 2023, that it has secured a one-time exemption from the Finance Ministry regarding the 25% public shareholding rule.
The rule mandates that a listed entity with a market capitalization exceeding Rs 1 trillion must achieve a minimum public shareholding threshold of 25% within five years of listing. LIC, which debuted on the bourses on 17 May, 2022, was originally required to meet the 25% minimum public shareholding (MPS) rule by 2027. However, it has now been granted an extension of 10 years, with the new deadline set for May 2032.
In a regulatory filing, India's largest life insurer announced that the Department of Economic Affairs, Ministry of Finance, through an Office Memorandum dated December 20, 2023, had decided, in the public interest, to accord a one-time exemption to Life Insurance Corporation of India. The exemption allows the company to attain the mandated 25% minimum public shareholding (MPS) within a period of 10 years from the date of its listing, specifically until May 2032. This decision falls under Rule 19A (6) of the Securities Contract (Regulations) Rules (SCRR) 1957, as conveyed by the insurer.
LIC's journey into the public market commenced in May 2022, marked by the divestment of 3.5% equity through an initial public offering. Despite the shares being listed at a discount of over 8%, the IPO contributed Rs 20,557 crore to the exchequer.
On Thursday, 21 December 2023, LIC's shares closed 0.52% higher at Rs 764.55 apiece on the Bombay Stock Exchange (BSE). In another recent move, the company disclosed selling over a 2% stake in Dixon Technologies India Limited, reducing its shareholding from 2,997,913 to 1,794,395.
Notably, it was reported earlier this week that LIC's group premium experienced a decline of 37.48%, totaling Rs 11,649.54 crore in November 2023, compared to Rs 18,635.93 crore in November 2022. The exemption from the 25% MPS rule provides LIC with strategic flexibility as it navigates the evolving dynamics of the market.