The voting rights of LIC will not exceed 10% of the total net effective voting rights of the IDBI Bank. Post completion of the strategic disinvestment transaction, the LIC will bring down its residual shareholding in the IDBI Bank to 15% or below, within two years of the closing date, as directed by the Reserve Bank of India
Mumbai: The Securities and Exchange Board of India (SEBI) has approved the reclassification of the Life Insurance Corporation (LIC) as a public shareholder of the IDBI Bank for its residual stake on completion of strategic divestment in the lender.
`In light of the ongoing strategic disinvestment of the IDBI Bank (Transaction) as approved by the Cabinet Committee on Economic Affairs dated May 05, 2021, we have been informed by Department of Investment and Public Asset Management, Government of India (“DIPAM”) that the SEBI has approved the reclassification of the LIC as a public shareholder of the IDBI Bank subject to the fulfilment of a few conditions upon completion of the transaction,” informed IDBI Bank in its stock market disclosures.
Some of the conditions Sebi has stipulated are-
-The voting rights of LIC will not exceed 10% (ten percent) of the total net effective voting rights of the IDBI Bank;
– Post completion of the strategic disinvestment transaction, the LIC will bring down its residual shareholding in the IDBI Bank to 15% (fifteen percent) or below, within two years of the closing date, as directed by the Reserve Bank of India.
-LIC will not exercise control over the affairs of the IDBI Bank, directly or indirectly. LIC will not have any special rights with respect to the IDBI Bank, through formal or informal arrangements, including through any shareholders agreements;
-LIC will not be represented on IDBI Bank’s Board of Directors (including not having
a nominee director) nor act as a key managerial person;
-The intention of LIC to get its residual shareholding in the IDBI Bank reclassified as public shall be specified in the letter of offer dispatched to the shareholders of the IDBI Bank in connection with the open offer made by the new acquirer pursuant to the strategic disinvestment of the IDBI Bank;
– The IDBI Bank should make requisite applications to the Stock Exchanges for reclassification of LIC’s residual shareholding in the IDBI Bank as ‘public’ after completion of the strategic disinvestment transaction;