Coal India Ltd (CIL) is planning to seek the nod of its minority shareholders to alter its Articles of Association to enable a buyback of shares, as advised by the Department of Public Enterprises.
Soon after the Cabinet clearance of the proposal on cash-rich public sector units being asked by the government to buy back their shares from the government, the Public Enterprises department advised PSUs to amend their Articles of Association to provide buyback of shares, if such provisions do not exist in the articles.
Therefore, CIL plans to seek shareholder nod for inserting that clause. The board approved this proposal on May 28, 2012.
Since 2011-12, the Department of Divestment has been discussing means to meet the government’s Rs. 40,000 crore target through divestment of a part of its holdings in select PSUs.
However, given the volatility of the stock markets, this was becoming a tricky proposition.
The idea was to get 20 or so cash-rich PSUs including CIL to buy back their own shares from the government.
