NEW DELHI: Union Cabinet on Wednesday gave the boards of State Owned Enterprise (SOEs) the authority to decide on the closure and divestment of units/subsidiaries.
Currently, the Boards of Directors of holding or parent public sector businesses have been assigned specific authorities to make equity investments, establish joint ventures and wholly-owned subsidiaries, and execute mergers and acquisitions, subject to certain maximum equity limitations. net.
Except for very restricted powers granted to Maharatna PSE for divestment of minority stake in its subsidiaries, the Boards have no power to divest or close its subsidiaries, units, or Joint Venture (JV) interests.
Consequently, regardless of the scale of operations or money deployed, Cabinet permission was required for both strategic divestment and sale of minority stakes or closure of subsidiaries or units, or sale of their shares in a JV. "The Union Cabinet approved the proposal to empower the Board of Directors of the Holding / Parent Public Sector Companies to recommend and carry out the Divestment process (both strategic divestment and minority stake sale) or closure of any of its subsidiaries/units/joint venture interests," according to an official statement.
The alternative divestment mechanism will award 'in principle' approval for the divestment (both strategic divestment and minority sale) / closure of Maharatna PSE subsidiaries that have been delegated to them, and will assess the parent or PSE holding company's divestment or closure procedure. The PSEs' approach for carrying out strategic divestment/closure operations must be based on public bidding principles and be consistent with the specified guiding principles.
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