TagGovernment Companies

Public Sector Undertakings and Corporate Governance

The NSE Centre for Excellence in Corporate Governance (CECG) has issued its most recent quarterly briefing titled “Corporate Governance in State-Owned Enterprises”. The executive summary is as follows: – State-Owned Enterprises (SOEs) constitute an integral part of India’s economy, and their performance has generally been encouraging; – They are subject to stringent governance norms:...

CSR in Government Companies

The concept of corporate social responsibility (CSR) has acquired tremendous prominence in India since the enactment of the Companies Act, 2013 and the Companies (Corporate Social Responsibility Policy) Rules, 2014 (the CSR Rules). They are applicable to large companies, whether or not they are listed on the stock exchange. Now, the Ministry of Heavy Industries & Public Enterprises of the...

CSR in Public Sector Enterprises

The provisions relating to corporate social responsibility (CSR) in the Companies Bill, 2011 have garnered sufficient attention on the topic. Those provisions are largely in the nature of CSR spending. While the Bill is pending in Parliament, the Department of Public Enterprises has proceeded to issue a revised set of “Guidelines on Corporate Social Responsibility and Sustainability for Central...

Governments as Issuers of Securities

As we have been constantly focusing on this Blog (here, here and here), public sector enterprises (PSEs) in India that are substantially owned by the Government often take advantage of relaxations and special dispensations from the applicability of securities laws and corporate governance norms that otherwise apply in their entirety to their private sector counterparts. Even where actions have...

Relaxation of Free Float Requirement

Earlier, on June 4, 2010, the Ministry of Finance introduced a requirement that all listed companies must have a public shareholding of 25%. This was to bring about uniformity and create a level playing field for all listed companies, and was the result of detailed deliberations that spanned several years. Although the rule was met with consternation by industry due to the ensuing possibility of...

Bits of Interest

1. Mutual Funds and Unit Premium The Law-In-Perspective Blog uses the analogy of Ponzi schemes to explain a March 2010 circular of SEBI that prohibits mutual funds from using the unit premium reserve to pay dividends. If one would prefer to avoid the negative connotation associated with a Ponzi scheme, the post also looks at another parallel, being the restrictions under the Companies Act, 1956...

Governance Norms for Central PSUs

In 2007, the Central Government issued the Guidelines on Corporate Governance for Central Public Sector Enterprises (CPSEs). This was a measure introduced to bring corporate governance norms in CPSEs on par with the private sector. However, it was only a voluntary measure. On March 25, 2010, the Government announced that the Guidelines would now be continued on a mandatory basis. Hence, all CPSEs...

Do Auctions in Public Offerings Work?

The SEBI (Issue of Capital and Disclosure) Regulations, 2009 were recently amended to provide for “French” auction as one of the methods of price discovery in follow-on public offerings. This was supposedly brought about with a view to encourage the use of such auction mechanism in Government disinvestments. However, the results emanating from the first offering where the auction mechanism was...

Commencement of Disinvestment Process

Following the Finance Minister’s announcement in Budget 2009 to undertake disinvestments, the Government has now announced stake sales in 25 public sector companies through public offers. Its zeal to ensure the success of these public floats of shares is evidenced by a proposal to grant significant powers to the Department of Disinvestment. The truth, however, is that disinvestments tend to be a...

The Continuing Debate on Governance in Government Companies

When Government companies list their shares on stock exchanges, they are required to deal with two distinct constituencies from a corporate governance standpoint: one, being the Government itself as the controlling shareholder or promoter, and the other, being the minority (public) shareholders. When the Government is in a controlling position in the company, the obvious question that arises is...

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