LIC Granted 3-Year Extension by Sebi to Achieve 10% Public Shareholding

In a move aimed at granting additional time to Life Insurance Corporation (LIC) of India to meet regulatory requirements, the Securities and Exchange Board of India (Sebi) has extended LIC’s deadline to achieve a minimum 10% public shareholding. LIC, a state-owned insurance giant, now has until May 16, 2027, to fulfill this obligation.

Key Details

Extension Granted

•  Sebi has provided LIC with a three-year extension, allowing the company to increase its public shareholding to 10% within a five-year period from its listing date.

Market Response

Following the announcement, LIC’s stock surged by 6.3% on the Bombay Stock Exchange (BSE), closing at Rs 989.8 per share, despite broader indices experiencing a slight decline.

Current Status

•  As of March 31, 2024, LIC’s public shareholding stands at 3.5%, indicating that significant divestment is still required for compliance.

Background

Listing Date

•  LIC was listed on May 17, 2022, triggering the initial requirement for achieving a 10% public shareholding within three years.

Government Intervention

•  In December, the finance ministry granted LIC a one-time exemption from the 25% public shareholding rule for a period of 10 years. This exemption aimed to alleviate the pressure on LIC to comply with stringent regulatory norms.

Remaining Divestment

•  The government still needs to divest an additional 6.5% of its stake in LIC over the next three years to enable LIC to reach the 10% shareholding threshold.

This extension underscores the complexities involved in transitioning a state-owned behemoth like LIC towards greater public ownership while balancing regulatory requirements with market dynamics.