Minimum Public Shareholding (MPS) refers to the minimum portion of a listed companyís shares that must be held by public investors, as mandated by the Securities and Exchange Board of India (SEBI). This rule ensures greater market transparency, liquidity, and fair price discovery by preventing promoters from holding excessive control over a listed entity.

As per SEBI regulations, all listed companies in India are required to maintain at least 25% public shareholding. This means promoters and promoter groups can hold a maximum of 75% of the companyís paid-up equity capital. Newly listed firms on stock exchanges are typically given a specified time frameóusually three yearsóto comply with this requirement.

Public shareholders include individual investors, institutional investors, mutual funds, and foreign portfolio investors who do not form part of the promoter group. Maintaining the MPS threshold helps improve market liquidity by ensuring an adequate number of shares are available for trading. It also strengthens corporate governance by allowing a diversified investor base to hold management accountable through voting rights and disclosures.

Companies that fail to meet the MPS requirement face regulatory actions such as fines, restrictions on promoter share sales, or suspension of trading in their securities. To achieve compliance, firms may adopt methods like offer for sale (OFS), qualified institutional placement (QIP), rights issues, or bonus issues to increase public participation.

Overall, the Minimum Public Shareholding rule is a key pillar of Indiaís capital market framework. It promotes market integrity, investor confidence, and equitable participation, ensuring that listed companies operate with greater transparency and accountability.