Law ministry rejects DoD disqualification norms
New Delhi--The law ministry has rejected proposed by the department of disinvestment (DoD) for disqualifying companies on the grounds that the guidelines prevent just about all Indian firms from bidding for the government stake in public sector enterprises.
The law ministry instead says that only if a nexus affecting the company’s ability to run the PSE can be established should it be debarred from bidding for government equity.
Union law, justice & company affairs minister Arun Jaitley has told DoD secretary Pradip Baijal at the meeting held today that if an Indian company can acquire a stake in a PSE via the creeping acquisition or the hostile takeover route, it should also be allowed to acquire stakes via the government’s bidding process.
Allowing more companies to bid for the government stake will raise its valuation. Preventing them will not help since the companies can in any case pick up the stake in the open market.
Earlier DoD wanted to bar companies named by Sebi in its final orders from bidding. The idea was to exclude companies, which defrauded small investors. The law ministry says that Sebi has issued orders against companies over a wide range of other issues also.
Back to News Review index page