Name four options available to the Company/promoters for increasing the public holding so as to meet the provisions of continuous listing. Also explain in detail with Quantity, Percentage, Ratio and Methodology to be ado

To meet the provisions of continuous listing by increasing public holding, the Company/promoters have several options: Option 1: Issuance of shares to public through prospectus (Further Public Offer - FPO) Methodology: The company can issue additional shares to the public through a prospectus. This will increase the total share capital of the company and consequently dilute the percentage shareholding of the promoters, thereby increasing the public float. Quantity/Percentage: To achieve 25% public shareholding, the company needs to increase the public holding by 2,50,000 shares (as calculated in 1(a)(ii)). If the company issues 3,33,334 equity shares to the public, the total share capital will become 1,13,33,334 shares. The public will then hold 28,33,334 shares (25,00,000 existing + 3,33,334 new), which constitutes approximately 25% of the total share capital. Ratio: The ratio of public shares to total shares would become 25:100. Mechanism: These shares would be issued by way of a public offer through a prospectus, adhering to SEBI (Issue of Capital and Disclosure Requirements) Regulations. Option 2: Offer for Sale (OFS) of shares by promoters to public Methodology: Promoters can sell their excess shareholdings (beyond 75%) in the stock market through the OFS mechanism provided by the stock exchange. This method does not increase the total share capital of the company but transfers shares from promoters to the public. Quantity/Percentage: As calculated in 1(a)(ii), the promoters need to dilute 2,50,000 shares. These 2,50,000 shares would be offered for sale to the public. Ratio: The promoter holding would reduce from 77.27% to 75%, and public holding would increase from 22.73% to 25%. Mechanism: The proceeds from the sale of shares go to the promoters, not the company. All expenses related to the OFS are borne by the promoters. Option 3: Rights Issue to public shareholders (excluding promoters) Methodology: The company can issue additional shares to its existing shareholders on a rights basis, but with promoters foregoing their entitlement. This would dilute the percentage holding of promoters relative to public shareholders. Quantity/Percentage: If the company issues 3,33,334 equity shares to the existing public shareholders (who currently hold 25,00,000 shares), and promoters forego their rights, the public holding will increase. Ratio: The rights issue could be structured such that public shareholders receive a certain number of shares for every share held. For example, if 3,33,334 shares are issued to 25,00,000 public shares, the ratio would be approximately 0.13 shares for every 1 share held by public shareholders. Mechanism: The shares would typically be issued at a price lower than the market price to ensure subscription. The issue may be underwritten to cover for under-subscription. Option 4: Bonus Issue to the public shareholders (excluding promoters) Methodology: The company can issue bonus shares to its existing public shareholders, with promoters foregoing their entitlement to such bonus shares. This increases the number of shares held by the public without any cash outflow from them, thereby increasing the public float percentage. Quantity/Percentage: Similar to the rights issue, if 3,33,334 equity shares are issued as bonus shares to the existing public shareholders (25,00,000 shares), and promoters forego their entitlement, the public holding will increase. Ratio: The bonus issue ratio could be, for instance, 0.15 shares for every 1 share held by public shareholders (if the total share capital is to increase to 1,13,33,334 shares and public holding to 28,34,000 shares). Mechanism: This method increases the total share capital and the number of shares held by the public, fulfilling the condition of quantum rising. This strategy was famously adopted by Reliance Bonus Limited to benefit public shareholders.