Markets regulator Sebi today exempted the government from making open offers to acquire additional stakes in three state-run lenders -- Corporation Bank, Dena Bank and Bank of India -- through preferential allotments.
The central government, which is promoter of these banks, has proposed to acquire more than 15.66 crore shares of Corporation Bank following a proposed preferential allotment by the bank.
The proposed allotment of shares would increase the shareholding of the government in Corporation Bank from 63.33 per cent to 69.11 per cent and would have triggered the provisions of Takeover Regulation.
In Dena Bank's case, the government proposed to pick up 8.41 crore equity through a preferential allotment by the Bank, pursuant to which the government's stake would increase to 65 per cent from 59.75 per cent.
With regard to Bank of India, the government plans to buy 12.70 crore equity through a proposed preferential allotment. Following this, the government stake in the lender would increase from 64.43 per cent to 70.13 per cent.
In three separate orders, the Securities and Exchange Board of India (Sebi) said there would not be any change in the management control in these banks following the proposed transactions.
The regulator further said these are 'fit' cases from grant of exemption under the Takeover Regulations to the central government from the obligation to make an open offer with respect to the proposed increase of shares/voting rights in the banks pursuant to the proposed preferential issue and allotment of equity shares.
The exemption has been granted subject to the condition that the government or the bank would ensure compliance with the statements, disclosures and undertakings made with regard to the transactions, among others.
The banks had filed their applications with the markets regulator to seek exemption on behalf of their promoter, the Government of India, in August-September this year.
Under Sebi norms, generally entities holding 25 per cent or more shares in a listed company need to make an open offer if they acquire additional five per cent stake or more in that company. Through the open offer, the acquirer is required to acquire shares from the minority shareholders as well.
However, exemptions can be granted by Sebi in certain cases. Earlier also, the government has been granted such exemptions in case of other state-run entities in similar circumstances.
