| Chidambaram may head EGoM on FDI overhaul |
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New Delhi, 19 June A new Empowered Group of Ministers ( EGoM) is to be set up to have a look at the Arvind Mayaram panel report, which has suggested a major change in the foreign direct investment (FDI) regime. The EGoM is expected to be headed by Finance Minister P Chidambaram. "The eGoM will seek to overhaul the countrys FDI policy by raising caps in defence, telecom, multibrand retail, insurance and pension sectors," a key official told Business Standard. Its final contours would be decided during a meeting between Prime Minister Manmohan Singh and his cabinet colleagues in the first week of July. The EGoM will be asked to close the issue within a specified period, as the government aims to bring in all the changes in the next revision of Consolidated FDI Policy, to be effective from October 1. An EGoM is delegated the power to decide; this need not go to the cabinet. The Mayaram panel ( he is secretary, economic affairs) had yesterday recommended raising the FDI cap in the defence, telecom, multibrand retail, insurance and pension sectors. It also suggested simplifying the FDI policy structure by reducing the layers of caps. It has recommended raising the FDI limit in the defence sector from 26 per cent to 49 per cent and in telecom from 74 per cent to 100 per cent. It also wants raising of the cap in the insurance and pension sectors. The cabinet had already approved a rise in the FDI cap in these latter two segments to 49 per cent but Bills to that effect are pending in Parliament. To make the multi- brand retail segment more attractive to foreign investors, the panel suggested the FDI limit in this space be raised from 51 per cent to 74 per cent. For the media segment, it has recommended keeping the lowest cap at 49 per cent ( it is presently 26 per cent). Broadly, it has said that except in some sensitive sectors, FDI should be allowed under the approval route, not through the Foreign Investment Promotion Board. For single- brand retail, the panel suggested 49 per cent FDI under the automatic route, against the current 100 per cent under the approval route. In pharmaceuticals, it recommended 49 per cent FDI under the automatic route, against 100 per cent under the government approval route in expansion projects. Higher FDI would help finance the Centre's widening current account deficit, expected to be five per cent of gross domestic product for 2012- 13 against the Reserve Bank of India's comfort level of 2.5 per cent. Finance Minister PChidambaram |
| Fresenius moves SAT as Sebi order turns into delisting hurdle |
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Mumbai, 19 June Fresenius Kabi Oncology, a cancer research and anti- cancer products company, has moved the Securities Appellate Tribunal ( SAT) over the Securities and Exchange Board of India's ( Sebi) order on minimum public shareholding, which has emerged as an obstacle to its delisting plans. Earlier this month, Sebi had passed an order, restricting promoter activity for companies not meeting public shareholding norms. Today, Fresenius requested SAT to allow it to go ahead with its delisting schedule. Fresenius counsel Janak Dwarkadas asked the SAT bench to allow the company to continue with the delisting. " There is a calendar that is set... You have to take regular steps. The whole process would be over in September 2013. The company has to issue public announcements and letters of offer. It should be allowed to take those steps, subject to appeal," he said. SAT decided to defer the matter to Monday, since Sebi counsel was absent. Through an order on June 4, Sebi had restrained 105 companies, including Fresenius, for not complying with the 25 per cent minimum public shareholding norm. On June 3, when the deadline to meet the norm expired, promoter holding in Fresenius stood at 81 per cent. In its order, Sebi had prohibited the promoter of Fresenius from dealing in the company's shares. The order has potentially rendered the company's delisting bid untenable, as technically, the promoters won't be able to buy back requisite shares from investors. Earlier, promoter holding in Fresenius stood at 90 per cent. In October 2012, the promoters sold nine per cent stake through an offer for sale (OFS). This was aimed at complying with the 25 per cent minimum public shareholding norm. However, later, the company decided to delist from the bourses, instead of selling an additional six per cent stake. Subsequently, it initiated the delisting process. "If you first decide to go for 25 per cent public float and you change your mind to delist... you virtually can't… this is what Sebi wants to say… or they haven't applied their mind. These two can't run in parallel," Dwarkadas told the tribunal today. In April, a report by proxy advisory firm SES said Fresenius could have exploited a " regulatory vacuum" by first cutting promoter holding through an offer for sale and later, deciding to delist. " On May 30, 2012, the company disclosed a letter it had received from its promoter. The letter clearly indicated the objective of the promoters was to eventually reduce the holding of promoters to 75 per cent and increase public shareholding to 25 per cent. It also stated this would be achieved through one or more offer for sale, subject to the approval of the FIPB ( Foreign Investment Promotion Board). It did not reveal the intention of promoters to delist the shares," said an SES report. The proxy advisory says the OFS route was only made available for companies that either figured in the top 100, in terms of market capitalisation, or those required to increase public shareholding. " Therefore, since the company ( Fresenius) is not among the top 100, in terms of market capitalisation, it could have gone for the OFS route only for the purpose of increasing its public shareholding," it said. In April, in an email communication with Business Standard, the company had said the decision to delist was due to " certain extraneous events". THE STORY SO FAR OCTOBER 12, 2012: Fresenius promoters sell 9% stake through OFS APRIL 17, 2013: Fresenius board approves proposal to delist MAY 25: Fresenius gets shareholder approval to delist JUNE 4: Sebi bars promoters for non- compliance of MPS JUNE 19: Fresenius appeals in SAT against Sebi order |
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Company Secretary, Chennai
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