Money Jul 18, 2013
New Delhi: The Department of Industrial Policy and Promotion, which has sought comments on the definition of control in the context of FDI deals, is awaiting the views of the corporate affairs ministry on the issue.
Currently, ambiguity persists over the definition of "ownership and control," especially with regard to transactions involving foreign direct investment.
"The corporate affairs ministry is yet to submit its comments on control definition," a senior official of the commerce and industry ministry said.
DIPP, a part of the commerce ministry, has sought the views of various ministries and departments to bring more clarity on the issue.
The Rs 2,058 crore deal struck by Jet Airways to sell a 24 percent stake in the airline to Abu Dhabi's Etihad Airways is facing regulatory hurdles, while final approval from the Foreign Investment Promotion Board is on hold, pending more clarity on control and ownership of the Indian carrier.
On Tuesday, Commerce and Industry Minister Anand Sharma had said that a cabinet note regarding "ownership and control" in companies with FDI would be moved soon.
"We felt that there is a need to somewhat align the ownership and control because there have been a number of developments. One is Sebi's definition, second is Companies Act's definition. So, there are some changes brought in...I have discussed it with the Finance Minister and we have agreed on a formulation. I will be moving the cabinet note very soon," Sharma had said.
According to the minister, the new proposed definition "would not exactly be the same (as per the Companies Act) because here FDI is involved, so it cannot be as per the (provisions of) the Companies Act".
Earlier this week, Sebi chairman UK Sinha had said that any entity acquiring control of a listed Indian company would need to make an open offer to public shareholders.
The open offer to buy shares from minority shareholders would need to be made even if 'control' has been acquired without crossing the threshold of 25 percent.
"Sebi will be looking into any case where there is a suspicion or belief that control has been acquired. Sebi will apply its tests and take a decision accordingly," he had said.
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