The Capital market regulator Securities and Exchange Board of India (Sebi) has granted exemption to state-run NTPC from certain buyback (share repurchase) norms for the proposed amalgamation of wholly-owned subsidiaries with the parent company. In October, NTPC had filed an application with the Sebi to seek exemption from the strict enforcement of the buyback norms.
The application had been necessitated on account of a scheme of merger providing for the merger of NTPC's wholly-owned subsidiaries with itself, a Sebi order said. In November 2019, NTPC's board of directors had approved a scheme of merger entailing the merger of Nabinagar Power Generating Company Ltd and Kanti Bijlee Utpadan Nigam Ltd with NTPC.
For this, the company proposes to explore the possibility of buying back its equity shares from the existing shareholders on a proportionate basis through tender offer route, subject to the requisite approval, but such buyback will not be permitted the certain provision of Buy-back Regulations since there is a scheme of amalgamation pending at the time of the public announcement. The provision of buy-back norms, for which exemption is sought "prohibits the Company from making any public announcement of buy-back during the pendency of any scheme of amalgamation pursuant to the provisions of the Companies Act, 2013," Sebi noted. Sebi considered NTPC's application and noted the proposed buyback, as per NTPC, will be in the interests of investors as the shareholders of the company will benefit from return of surplus cash through the buyback programme.
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