New Delhi: State-owned insurer Life Insurance Corporation of India and the government will not veto any proposals of the new owner post privatisation of Industrial Development Bank of India as a part of their plan to give the incoming promoters a free hand, despite the government and LIC holding significant shareholding, said a senior official, reported news agency PTI.
The official said post-privatisation, the government and LIC shareholding will come down to 34 per cent but they do not intend to move in tandem to block any special resolution proposed by the new promoter.
“There should not be any such concern. If we are selling a 60.72 per cent stake and transferring management control, it should be clear to investors that we are not interested in controlling the institution and hence will not oppose any resolution,” the official said.
The statement came a month after the government invited bids for the sale of 60.72 per cent stake in IDBI Bank, which is 45.48 per cent owned by the government and 49.24 per cent by the LIC.
“We will give an assurance on this at the RFP or financial bids stage to the qualified bidders for IDBI Bank,” the official told the news agency.
There have been concerns in some quarters that the government and LIC holding 34 per cent stake in IDBI Bank after its privatisation may act as a deterrent for bidders as a shareholder or a group of shareholders together holding 25 per cent or more of the shares can effectively oppose a special resolution.
Allaying such a concern, the official said “if that was the intent, then we would not have gone ahead with selling about 61 per cent stake. We could have sold less. The government and LIC would not act together in opposing any resolution and we will clarify that in writing in the share purchase pact.” Decisions like share buyback, loans and investments by company, removal of auditor before time and reduction in share capital require to be approved by a special resolution, with at least 75 per cent of shareholders voting in favour.