Sebi may consider proposal to hike Rs 2 lakh per employee limit to invest in companies through discounted share offers
The market regulator may consider a suggestion that the limit set for employees of publicsector enterprises to invest in their companies through discounted share offers be raised from the current Rs.2 lakh, an official with knowledge of the matter said.
The move comes after power producer NTPC's sale of shares to its employees. NTPC employees bid for more than 85% of the over 2 crore shares offered to them at a 5% discount to the price at which the government sold shares at a public issue.
It was the best ever response to a state-run company's offer to its employees post a public issue, but the government believes it can be even better if the limit is raised.
There have been some discussions on the issue and it is expected that the Securities and Exchange Board of India (Sebi) may consider easing the rules, the official said.
“There is a case for this, but interest of the PSU sector cannot be looked at in isolation. If any relaxation is provided, it will come with some more stringent norms.“
A one-year lock-in period may be introduced for the shares thus acquired by employees, the official said. Under the current rules, there is no such period when shares can't be sold.
Sebi didn't respond to an email seeking comment.
Employees of state-run enterprises are offered shares at a 5% dis count to the lowest cut off price discovered in the wider public offer price. The offer to employees are made after a cooling period of r a cooling period of 12 weeks from the date of disinvest ment by the go vernment.
NTPC staff was last month offered shares at Rs.115.90 each, compared with the then mar ket price of aro . 150. The cut off price for the und ` government's share sale to the public in February was ` . 122. The government raised Rs. 203.78 crore from the sale to employees.
The amount raised could have been more if the employees had been allowed to pick extra shares to the extent issue was not subscribed.Many who could have bought more than what they did were prevented by the investment cap.
“There is still a headroom available and the present investment . 2 lakh per employee acts limit of ` as a deterrent. The government should ask the regulator to ease the norms and also allow employee trust funds to participate,“ said an executive at a state-run firm.
Earlier this year, in the case of Indian Oil Corp, 40% of the employees participated in the issue, applying for 53.17% of the 1 crore shares offered to them.
A government official said with around 10 companies lined up for stake sale this fiscal year, more relaxed investment rules would encourage employee participation.
The Economics Times New Delhi,28th July 2016
Comments
Post a Comment