CCEA nod to create Special National Investment Fund

The Cabinet Committee on Economic Affairs (CCEA) has approved a mechanism to bring down the government shareholding in its six sick companies to the required 90% or less. As per CCEA decision, a Special National Investment Fund will be created to transfer shares of these companies — HMT, Scooters India, Hindustan Photo Films Manufacturing Co, ITI, Andrew Yule & Co and Fertilizers & Chemicals (Travancore) Ltd.

What will Special National Investment Fund do?

 The government has decided to sell the 90% of less of the equities it holds in the above mentioned six sick companies. As per the SEBI’s minimum public holding norms, all government-owned units will have to have at least 10% of public holding.   The number of shares required to make the six companies compliant with the minimum public share holding norm will be transferred to the Special National Investment Fund out of government share holding on an irrevocable basis, without any consideration (meaning, money changing hands). The fund will be managed by independent professional managers. It will sell the transferred shares within 5 years. The funds realized from the sale would be used for social sector schemes of the government.

Month: Current Affairs - August, 2013