PSU employees to play larger role in disinvestment -Governance Now

PSU employees to play larger role in disinvestment

Sebi has allowed companies to allot more shares for employees during public offers, increasing the limit for the value to Rs 5 lakh from the current Rs 2 lakh

GN Bureau | October 4, 2016

#SEBI #disinvestment #ONGC #NTPC #BHEL #IOC

Market regulator Sebi has agreed to the government’s proposal to give employees of central public sector undertakings (PSUs) a larger role to play in the disinvestment process.

With a long list of central PSUs lined up for disinvestment in the current financial year, employees of state owned firms will be given the right to subscribe to more than twice the current quota of shares, Sebi said on Tuesday, according to a news report published in the New Indian Express.

The move has been taken due to the enthusiastic subscription demand from employees earlier in the years when Indian Oil Corporation and NTPC shares went on sale.

The finance ministry had requested the market regulator to allow state run companies’ employees to apply for shares beyond the limit of Rs 2 lakh per employee.

Sebi took up the proposal for examination during its meeting on September 23, and has now allowed companies to allot more shares for employees during public offers. There would be an increase in the limit for the value of such allotments to Rs 5 lakh from the current Rs 2 lakh.

Currently, the system in place lets the government offer shares to employees of a company up to a maximum of 0.5 per cent of the post issue capital of the issuer. The shares themselves are offered at a discount of 5 percent to the employee.

According to government data, the centre had raised Rs 262 crore through the allotment of shares to employees of IOC. They had applied for 53 percent of the shares offered to them. In the case of NTPC, the government raised Rs 204 crore when the employees bid for over 85 percent of the shares.

During the current financial year, the government has lined up over a dozen companies including oil and gas sector giant ONGC, natural resources firm NMDC and heavy electronics major BHEL for disinvestment.

Through the sale of stake in PSUs, the government is expecting to raise over Rs 56,500 crore.

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