High ownership concentration in the hands of few has always been a problem in emerging economies. India, with concentrated ownership in the hands of few owner/managers (Promoters), is no exception! Such concentrated ownership structures weaken the internal governance mechanisms and increase the probability of minority shareholder expropriation. This is called Principal-Principal conflict (Promoter-Minority Shareholders), which lead to many market imperfections (illiquidity, price manipulations, illegal insider trading, etc) and keep the institutional investors at bay. To tackle such issues, Securities and Exchange Board of India (SEBI) (under the direction of Ministry of Finance) came up with an amendment in the listing regulation for both initial and continued listing in the year 2010. Publicly listed private firms in India were directed to increase their free float stocks to a minimum of 25% (10% for PSUs) within three years. Out of the 275 affected listed firms, close to 70% companies complied with the regulation by choosing the recommended methods of adherence like – sale of equity on the floor of house, further public offer, offer for sale, rights/bonus issue, and institutional private placement. While there were specific cases where certain firms tried to comply with the regulation by declassifying some promoters as public shareholders to which SEBI had raised concerns. The issue was discussed in the Securities Appellate Tribunal, which directed SEBI to come up with a detailed regulation on such re-classification. This discussion paper looks into the nuances of that regulation and tries to comment on the various merits and pitfalls which this may have in the broader scheme of the ownership structure in Indian firms. At one hand the proposed regulation is very risk averse which creates various operational complexities from the promoters’ point of view while from the minority shareholders’ protection perspective should prove to be mixed.