Government offers LIC special exemption for 25% MPS target in 10 years

The Indian government has granted a special exemption to the Life Insurance Corporation of India (LIC) regarding the Minimum Public Shareholding (MPS) requirement. LIC, the country's largest insurer, was listed on the stock exchange in May 2022, with the government selling a 3.5 per cent stake through an Initial Public Offering (IPO). As of now, the government holds a 96.5 per cent stake in LIC.

In a recent stock exchange filing, LIC announced that the Department of Economic Affairs has approved a one-time exemption for LIC to achieve the 25 per cent MPS within 10 years from the date of listing, extending until May 2032. This exemption is notable, as earlier in the year, the government had amended regulations to exempt listed state-run companies, including banks, from the 25 per cent MPS rule even after their privatization, if deemed in the "public interest."

The amendment, introduced in January, is expected to enhance the appeal for investors looking to acquire state-run companies. The move is part of broader efforts to make such investments more attractive and facilitate the privatization process. It's worth mentioning that in July 2021, the government had initially announced the exemption for all listed public sector units from the MPS requirement.

On the day of this announcement, LIC shares closed at Rs 764.55 apiece on the BSE, marking a 0.52 per cent increase compared to the previous day's closing value.