In a major push to strategic disinvestments by Centre in listed firms, SEBI has empowered itself to “relax the strict enforcement” of any of the requirements of its Listing Obligations and Disclosure Requirements (LODR) Regulations in certain situations. 

Such relaxation would be considered only in cases where the Central Government makes an application in relation to its strategic disinvestment in a listed entity, according to SEBI.

“The Board may after due consideration of the interest of the investors and the securities market and for the development of the securities market, relax the strict enforcement of any of the requirements of these (LODR) regulations, if an application is made by the central government in relation to its strategic disinvestment in a listed entity”, said the SEBI amendment to its LODR regulations.

The latest SEBI move could give a fillip to strategic disinvestments lined up by the Central government for the current fiscal, say economy watchers. 

This could be a facilitator for strategic sale as SEBI can now on a case to case basis approve relaxations to LODR norms, they pointed out. 

Even as this appears to be a deviation from equality for all principle, the current special circumstances necessitates such relaxations keeping in mind the broader objectives of strategic disinvestment, said a market observer.

One of the areas where the relaxation could be considered by SEBI for LODR purposes is the minimum public shareholding norm, say experts. 

For instance, in the currently much talked about Centre’s plan to go in for strategic disinvestment in IDBI Bank, the market regulator SEBI could — if the Centre makes an application—consider and approve government and LIC holding in aggregate in IDBI Bank as “public shareholding” and treat the entity as eligible for continued listing, say market observers. Currently, LIC has 49.24 per cent stake in IDBI Bank while the Centre has 45.48 per cent stake in the bank.

Now the plan is that government will sell 30.48 per cent and LIC 30.24 per cent stake, aggregating 60.72 per cent of the equity share capital of IDBI Bank, along with transfer of management control.

Besides IDBI Bank Ltd, the Centre is already looking at Rashtriya Ispat Nigam Ltd, BALCO, CONCOR and Hindustan Zinc as strategic sale prospects for the current fiscal.

Although the Centre wants to push strategic sales of CPSEs, the process has been a drag as such sales involves change of management control. Delays also arise due to litigation, questions over valuation of assets and eligibility criteria of bidders.

The Centre has budgeted disinvestment target of ₹65,000 crore for the current fiscal. 

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