The Hindu Business Line : ONGC: Shourie sees no legal hitch in participatory notes

THAT'S A GOOD ONE: Mr Arun Shourie, Minister for Disinvestment, IT and Communications, Mr Y. K. Modi, President, FICCI, and Mr Azim Premji, Chairman, Wipro, at a meet in the Capital on Wednesday. — Ramesh Sharma

New Delhi , March 3

THE Disinvestment Minister, Mr Arun Shourie, today said there was no legal hitch in allowing lead managers of the ONGC public offer and their associates to issue participatory notes, but added that only large investors could use the notes to subscribe to the mega public issue, which will open on Friday.

"We have held a meeting with lawyers who told us that there is no legal hitch in allowing lead managers of ONGC to issue participatory notes," Mr Shourie told presspersons after inaugurating the `Made in Pakistan Exhibition' here.

Billed as the largest-ever public offer in the country's corporate history, the Disinvestment Ministry was of the view that the lead managers and their global contacts could be allowed to issue participatory notes, which are not permitted under the SEBI guidelines.

"Participatory notes are mainly for getting big investors, not really to get retail investors. In this case, advisers also have contacts and we want to use everybody's contacts," Mr Shourie said.

Significantly, SEBI had last week told the Ministry that lead managers to the ONGC offer and their associates could be allowed to issue participatory notes subject to certain stringent caveats.

Participatory notes are offshore derivative instruments issued by foreign institutional investors (FIIs) and their sub-accounts against underlying Indian securities to overseas clients or investors. SEBI had imposed severe curbs on participatory notes early this year after the 2001 securities scam. The notes enable holders to hide their identities while trading in the market. Last month, SEBI had directed FIIs not to issue participatory notes to unregulated entities from February 3.

ONGC would be the last of the six public offers, after IPCL, IBP Co Ltd, CMC Ltd, Dredging Corporation of India and GAIL.

Mr Shourie expressed the hope that the ONGC offer for sale of 10 per cent Government equity would also evoke good retail interest like the other five offers.

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