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To help financially weak public sector undertakings meet the 10 per cent minimum public shareholding norm, the Government has approved the setting up of a Special National Investment Fund.
A meeting of the Cabinet Committee on Economic Affairs (CCEA) decided that the fund will support six Central public sector enterprises — Andrew Yule & Company, Fertilisers & Chemicals (Travancore), Hindustan Photo Films Manufacturing Co, HMT, ITI and Scooters India. All these companies are listed on stock exchanges and need to fulfil the minimum public shareholding requirement.
Market regulator Securities and Exchange Board of India (SEBI) had set August 8 as the deadline to comply with the norm. Public shareholding is defined as shares owned by those others than promoters, such as the general public, banks, financial institutions and mutual funds.
“Since these companies were not financially sound, they found it difficult to meet the minimum public shareholding by following SEBI-approved methods. However, the Government was keen to comply with the requirement in all public sector companies. The Department of Disinvestment discussed the matter with SEBI and proposed to meet minimum public shareholding in the six companies,” an official statement said.
The number of shares required to make the six companies compliant with the norm will be transferred to the Special National Investment Fund out of the Government’s shareholding on irrevocable basis, for no consideration.
The fund will be stewarded by independent fund managers. It will sell the shares within five years. The amount realised will be used for social sector schemes. The modalities of the sale of shares in the fund would be decided by the Empowered Group of Ministers.
> shishir.sinha@thehindu.co.in
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