Millennium Post

Sebi exempts Govt from making open offer to IOB shareholders

The government, promoter of IOB, holds 73.80 per cent stake in the bank. It has proposed to acquire nearly 23 crore additional shares of the bank by way of preferential allotment against the Rs 1,200 crore infusion.

Once the government purchases these shares, its stake in IOB will rise by little over 5 per cent to 79.01 per cent.

As per the rules, when entities holding 25 per cent or more stake in a company acquire additional 5 per cent or more stake in the firm, they are required to make an open offer so as to provide an exit opportunity to the public shareholders.

In an order on Wednesday, Sebi said that even after the proposed hike in government stake in IOB the minimum public shareholding level— which is 10 per cent for public sector units — would be maintained.

In addition, the market regulator said there would be no change in the management control at IOB. Accordingly, Sebi said this was a ‘fit case to grant exemption’ to the government from the obligation to make an open offer which is otherwise required under the norms.
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