The Securities and Exchange Board of India (SEBI) on 18 December 2013 exempted the Government of India from making an offer to public shareholders for acquiring the shares of the Indian Overseas Bank (IOB). The order was issued after the Government planned to raise its stake in Indian Overseas Bank by five percent by infusion of 1200 crore rupees to 79 percent.
The order was issued by the SEBI after Government proposed to acquire nearly 23 crore additional shares of the bank by way of preferential allotment against the Rs 1200 crore infusion
The government’s stake will rise by little over 5 percent to 79.01 percent after the government purchases these shares.
As per the rules the entities that holds 25 percent or more stake in the company acquire 5 percent or more stake in the firm are required to make open offer to provide an exit opportunity to the Public shareholders.
SEBI in its order has said that the minimum public shareholder level in IOB, which is 10 percent for public sector units, would be maintained even after the proposed hike in Government hike in the bank. It has also said that there will be no change in the management control at the bank.
The bank filed an application on 8 November 2013 to SEBI seeking the exemption on behalf of the government. The exemption was allowed by the SEBI on a condition that the proposed acquisition will be in accordance to the provisions of the Companies law and government.
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