Markets regulator Sebi on Thursday exempted state-run Oil India from complying with buyback regulations with regard to its proposed 5.04 crore share purchase programme.
The order comes after the PSU filed an application in December with the Securities and Exchange Board of India (Sebi) seeking exemption from the strict enforcement of the buyback norms.
The application has been necessitated on account of transfer of 3,33,20,401 equity shares of Oil India, which were held by the promoter (government), to the asset management company of the Central Public Sector Enterprise Exchange Traded Fund (CPSEETF) on December 4, 2018.
According to Sebi, transfer of these equity shares by the promoters had occurred during the period between the date of passing the resolution of the board of directors approving the offer of buyback of securities of the company (November 19, 2018) and the closure of such offer (yet to occur).
Sebi's buyback rules impose an obligation on the company to ensure that its promoter(s) do not deal in the shares of the company in the stock exchange or off-market, including transfer of shares among themselves during the period from the date of passing the resolution of the board of directors till closing of the buyback offer.
On November 19, Oil India's board had approved the buyback of 5.05 crore equity shares (representing about 5 per cent of the total number of equity shares in the paid-up share capital of the company) at a price of Rs 215 per equity share for an aggregate consideration of Rs 1,085.72 crore.
Oil India, in its submission, said that the the proposed buyback will help in optimising its capital structure and improve its key financial ratios and would also lead to reduction in outstanding shares, improvement in earnings per share and enhanced return on invested capital.
Besides, the company said the strict enforcement of the buyback regulations at this point in time may result in undue hardship to investors, including shareholders of the company who may seek to participate in the proposed buyback.
"I note that the transfer of 3,33,20,401 equity shares of Oil India by its promoter on December 4, 2018 pursuant to the CPSEETF Scheme FFO 3 was necessitated as part of the ongoing disinvestment programme formulated by the Government of India," Sebi Whole Time Member G Mahalingam said in an order.
He further said the exemption or relaxation should be granted to Oil India.
Accordingly, Sebi has granted "exemption/relaxation to the company viz Oil India from ensuring compliance with the requirement of... the buyback Regulations in relation to the proposed buyback of 504,98,717 equity shares".
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