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PSU sell-off: SEBI to discuss takeover code

Our Bureau

NEW DELHI, June 20

THE SEBI board is set to consider on Thursday a proposal, mooted by the Government, seeking an exemption from complying with the takeover code for acquisition of listed State-owned companies, by private sector companies.

The move has been propelled by the Department of Disinvestment (DoD) which reckons that the public holding in those PSUs which are being disinvested would fall below the mandatory level of 25 per cent or 10 per cent as the case maybe, if a private sector company had to follow up the acquisition with an open offer of 20 per cent.

The DoD was advised by some of the investment bankers that this would impact on the liquidity of the scrips. It has also raised a few other issues including a review of the norms on what triggers off change in management control in a company. DoD has tol d SEBI that a decision on these issues is crucial prior to the sell off on PSUs like VSNL, IPCL and CMC.

Earlier, SEBI had made it clear to the DoD that it was against granting a special dispensation only to PSUs when all private sector companies have to follow the takeover guidelines. Subsequently, DoD took up the issue with the Cabinet Secretary and then the Finance Ministry.

The Finance Ministry has now referred the proposal to the SEBI board. According to indications, the board is not likely to view this proposal favourably.

Compliance of State-owned companies to the corporate governance norms as incorporated in the listing agreements is also likely to be taken up at the meeting. Many PSUs are yet to adhere to the norms for appointing adequate independent directors on their boards.

The board is also likely to review the state of preparedness by the regulator and the exchanges for the introduction of compulsory rolling settlement for more scrips from July 2.