Capital markets regulator Sebi on Friday granted exemption to state-run NTPC from certain buyback norms for the proposed merger of wholly-owned subsidiaries with the parent company.

In October, NTPC had filed an application with the Securities and Exchange Board of India (Sebi) to seek exemption from the strict enforcement of the buyback norms.

The application had been necessitated on account of a scheme of amalgamation providing for the merger of NTPC's wholly-owned subsidiaries with itself, a Sebi order said.

In November 2019, NTPC's board of directors had approved a scheme of amalgamation entailing the merger of Nabinagar Power Generating Company Ltd and Kanti Bijlee Utpadan Nigam Ltd with NTPC.

For this, the company proposes to explore the possibility of buying back its equity shares from the existing shareholders on proportionate basis through tender offer route, subject to the requisite approval, but such buy back will not be permitted certain provision of Buy-back Regulations since there is a scheme of amalgamation pending at the time of the public announcement.

The provision of buy-back norms, for which exemption is sought "prohibits the Company from making any public announcement of buy-back during the pendency of any scheme of amalgamation pursuant to the provisions of the Companies Act, 2013," Sebi noted. Sebi considered NTPC's application and noted the proposed buy-back, as per NTPC, will be in the interests of investors as the shareholders of the company will benefit from return of surplus cash through the buy-back programme.

Further, NTPC confirmed that there will be no new issue of equity shares or change in the shareholding pattern of the company consequent to the scheme of amalgamation with its wholly owned subsidiaries.

Thus, Sebi granted exemption to NTPC from ensuring compliance with certain provision of Buy-back norms. It also said the relaxation from the enforcement of the provision granted by Sebi shall not be construed as a relaxation from any other requirement under the buy-back norms.

The exemption granted by Sebi is subject to certain conditions. Among others, the scheme of amalgamation needs to be approved by the shareholders of NTPC, Sebi said.

According to a separate order, the regulator rejected request of three entities-- Ashok Kumar Thakkar, Raghurambhai Thakkar and Piyushkumar Thakkar-- for exemption from complying with the requirements of takeover norms with respect to the acquisition of shares in Art Nirman Ltd.

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Free Press Journal