Securities and Exchange Board of India (SEBI) would decide whether the Undertakings of Government of Tamil Nadu can buy the 5 per cent equity of Neyveli Lignite Corporation (NLC).
The decision to offload the central government’s 5 per cent equity in NLC was taken at a meeting of the Cabinet Committee on Economic Affairs on June 21. The union government plans to mop up around Rs 700 crore through the stake sale.
Following this, Tamil Nadu government proposed the central government to sell the stake to companies owned by it instead of selling it through an offer-for-sale (OFS).
SEBI will examine whether such sale is permitted within the Securities Contracts (Regulation) Rules, 1957, the Coal Minister, Sriprakash Jaiswal, said.
The union government, which holds 93.56 per cent in the miner, wants to sell 5 per cent equity in order to comply with the public shareholding norms of SEBI.
Tamil Nadu Chief Minister, J Jayalalithaa, and the workers of NLC oppose the move by the government to sell stake in the firm. The Prime Minister Manmohan Singh had earlier written to the Chief Minister explaining the necessity for divesting shares in NLC. The Chief Minister has reportedly written back to Singh, offering to buy 5 per cent stake.
The Department of Disinvestment has sought a legal view on the issue. According to legal opinion, State financial institutions qualify as bidders and can buy stake through OFS, media reports indicate.
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