New Delhi, Oct 14 (PTI) Markets regulator Sebi on Monday introduced a framework to monitor shareholding limits, public shareholding requirements and ‘suitability and suitability’ criteria for infrastructure institutions (MII), which include exchanges, clearing companies and depositories.

This framework applies to both listed and unlisted MIIs, requiring them to disclose their shareholding patterns on their websites quarterly in accordance with Sebi Listing Obligations (LODR) norms, the regulator said in a circular.

Each MII must appoint a non-associated designated depositary (DD) to monitor compliance with the holding limits. For depositaries, the other depository will act as DD.

The DD will monitor breaches of the 5 per cent or 15 per cent threshold, as applicable under the SECC Regulations, 2018 and the D&P Regulations, 2018, respectively, and take necessary action.

In addition, “the DD will monitor and inform the MII and the exchange on which its shares are listed (in the case of a listed MII), as the combined holding threshold of 49 percent of all persons resident outside India (directly or indirectly, either individually or with persons acting in concert) in the paid-up share capital of an MII is violated and take action accordingly.”

Sebi has asked stock exchanges to ensure that trading members (TMs), their associates and agents do not collectively hold more than 49 per cent of the capital. Holdings exceeding 45 per person require pre-approval for further purchases.

Further, Sebi has directed clearing companies to maintain at least 51 per cent stake in the exchanges, with no exchange holding more than 15 per cent in multiple CCs.

All shareholders holding 2% or more equity must meet the fit and proper criteria, with MIIs informing shareholders and reporting non-compliance to Sebi every quarter. In the event of a breach, the DD will freeze excess shares, deactivate voting rights and transfer dividends from excess holdings to Investor Protection Funds (IPF) or Settlement Guarantee Funds (SGF).

Disinvestment of any excess stake in a listed MII beyond the specified limit would be done through a special window provided by the exchange where MII shares are listed. However, any excess stake in an unlisted MII will be disposed of as per instructions given by Sebi on a case-by-case basis.

The framework will come into force on January 12, 2025, i.e. 90 days after the publication of the circular.