Correct Answer : 10%
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.
