Financial Daily from THE HINDU group of publications
Tuesday, Jan 28, 2003
Financial Daily from THE HINDU group of publications Tuesday, Jan 28, 2003 |
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Disinvestment Government - Policy Industry & Economy - Disinvestment Veto powers for Govt in HPCL post-sale Our Bureau
NEW DELHI, Jan. 27 THE Union Government will incorporate special clauses in the shareholders' agreement to retain veto powers over key decisions even after the oil refining company HPCL is privatised through strategic sale. As per a decision taken by the Cabinet Committee on Disinvestment (CCD) at a meeting held on Sunday, the Government will be left with a residual holding of 12 per cent in HPCL after selling 34 per cent to a strategic partner along with transfer of management control and a five per cent stock option to employees. According to the Companies Act, veto powers over special resolutions are granted to shareholders having a minimum stake of 26 per cent. But, with a residual stake of just 12 per cent, the Government proposes to appropriate all the rights that it wishes to have through the affirmative voting rights, a top Disinvestment Ministry official said. The special clauses contained in the shareholders' agreement would make it mandatory for the strategic partner to consult the Government for the purpose of changing the memorandum of association, share capital structure, winding up of the company, disposing of existing assets of the company and pursuing a new line of business which may be detrimental to the interests of the company. "The Government will build in adequate safeguards in the shareholders' agreement for the sale to protect its interests," the official said. The special clauses will exist till the Government decides to exit totally from the company by selling its residual stake of 12 per cent through the put option within a specified period after the strategic sale. The process of privatisation of HPCL is expected to start in a week to 10 days' time while that in BPCL will take a couple of months, the official said. Besides, HPCL and BPCL employees would be given stock options of five per cent of the Government equity at one-third of the strategic sale price or one-third of the past one-month average market price, whichever was lower, subject to a floor price of Rs 10 per share.
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