Skip to main content

LIC Misses Deadline To Divest 4.9% Stake In NSE



Life Insurance Corp. of India (LIC), the largest shareholder in National Stock Exchange of India, missed the Securities and Exchange Board of India (Sebi)’s 28 August deadline to divest a 4.9% stake in the stock exchange.

The shareholding threshold in NSE was breached when LIC acquired a 51% controlling stake in IDBI Bank. This led to the holding of trading members in NSE breaching the 49% mark under the Stock Exchange and Clearing Corp. (SECC)’s norms.

LIC’s holding, of 12.51%, was earlier not considered to be of a trading member. Rather, it was categorized as a strategic investor.

IDBI Bank, with less than 1% stake, was always categorized as a trading member. With LIC acquiring control of IDBI Bank the insurance company was reclassified as a trading member.

Before the deal, trading members held about 42% in NSE, but with addition of LIC’s 12.5% stake, the trading members now hold 53.89% in the exchange, or 4.89% above the threshold.

Sebi had given LIC two deadlines to divest the excess stake. The first was on 27 December 2019, which was subsequently extended by eight months, according to NSE’s annual report for the financial year 2020.

This excess shareholding and the associated voting and dividend rights now stand frozen. “Sebi directed LIC to divest its shareholding in NSE by 4.89% to reduce the TM/CM (trading member/ clearing member) shareholding in NSE to 49% within 12 months from the date of fall in public shareholding of NSE, 28 December 2018. NSE was also advised to inter-alia freeze LIC’s voting rights and all corporate action in respect of 4.89% till the time it was divested," NSE said.

“Upon LIC’s request to Sebi, Sebi granted additional time of eight months to LIC for divestment of the 4.89% stake from 27 December 2019," it added.

An email query to LIC seeking a response on whether it has sought another extension, or it would prefer to offload when the NSE goes public, and if it had decided on a method to reduce the shareholding, was not answered till press time. Mint reported on 28 August that Sebi is likely to grant an in-principle nod to NSE’s long-pending and awaited IPO soon.

Based on recent deals of NSE’s unlisted shares being sold in the open market, India’s largest exchange by trading volumes is valued at 42,000 crore. As such, LIC’s 4.9% stake could be valued at over 2,000 crore.

LIC’s excess shareholding has also impacted its dividend payout. NSE had declared final dividend for FY19 and interim dividend for FY20, which were paid to all eligible shareholders except LIC to the extent of 4.89% shares and were kept in abeyance.

“Final dividend for FY2018-19 amounting to 19,36,44,000 and interim dividend for FY2019-20 amounting to 23,72,13,900 to be paid to LIC had been transferred by NSE to the respective unpaid dividend accounts. Further, upon request of LIC to mitigate the interest loss and following Sebi no objection, an arrangement has been worked out with the dividend banker for the unpaid dividend amounts on behalf of  LIC," said NSE in the annual report.

    Sandip Ginodia , CEO 

 

    ALTIUS INVESTECH PVT LTD

 

   We deal in over 60 unlisted companies with 15 years of experience 

   For latest prices visit : www.abhisheksecurities.com/unlisted.htm / call : 09830271248 .

  Email : ginodiasandip1@gmail.com

  

Comments

Popular posts from this blog

Reliance's JioMart is averaging half a million orders per day; WhatsApp driving growth

  JioMart , Reliance's online-to-offline commerce  platform that launched in May , has scaled up rapidly, riding on the pandemic-fuelled digital acceleration. The service, which went   live in 200 cities across India, is currently processing an average of  500,000 orders per day. " We can go even higher on peak days",  Jio Platforms CEO   Kiran Thomas  revealed at the Facebook for Fuel India 2020 event. He said, "JioMart is empowering millions of  kiranas  and small merchants through the simple and secure platform of WhatsApp, and linking them to Reliance Retail's pan-India supply chain. We expect to grow manifold in future, and are optimistic about enabling new cohorts of users and making it easier for them to shop for daily essentials."  "Customers are transacting seamlessly on JioMart and the  conversational nature of the service  enabled by WhatsApp has made people adapt to it intuitively," he added. Reliance also stated that it will continue t

Stock broker SMC Global files for IPO

F inancial services company SMC Global Securities has filed draft red herring prospectus with SEBI for public issue of 1,58,67,380 equity shares of face value of Rs 2 each. The issue comprises a fresh issue of 79,33,690 equity shares by the company and an offer for sale of 79,33,690 shares by Millennium India Acquisition Company Inc. As of September 30, 2012, "We service our broking clients through a network of 43 branches and 2,521 registered sub-brokers and authorized persons spread in more than 500 cities and towns. We have also established an office in Dubai for brokerage and trading activities in that region," the company said. SMC has reported a loss of Rs 0.42 crore and total revenues of Rs 292.24 crore in the year ended March 31, 2012. "The proceeds of the fresh issue shall be utilised for margin maintenance with stock exchanges; part repayment of term loan; investments into subsidiary, SMC Comtrade; and general corporate purposes," according to p

TCS merger with TCS e serve

The board of Tata Consultancy Services (TCS) in its meeting on 18 October 2012 has approved the composite scheme of arrangement between TCS, TCS e-Serve (e-Serve) and TCS e-Serve International (TEIL). The composite scheme of arrangement provides for merger of e-Serve into TCS and demerger of TEIL's special economic zone (SEZ) undertaking(s) to TCS. The appointed date proposed for this scheme is 01 April 2013. TCS holds 96.26% of the paid up equity share capital of e-Serve. TEIL is a wholly owned subsidiary of e-Serve. As per the terms of the scheme of arrangement, shareholders of e-Serve (other than TCS) will receive 13 equity shares of Re 1 each of TCS for every 4 equity shares of Rs 10 each of e-Serve held by them. The board has approved the scheme of merger of Computational Research Laboratories (CRL) and Retail FullServe (RFL) with TCS. The proposed appointed date for the merger of CRL is 01 October 2012 and for the merger of RFL is 01 April 2012. Computational Res