DEP bars PSU staff fixing IPO/FPO prices from buying stocks

To maintain a high level of corporate governance, the government has directed public sector enterprises to prevent employees involved in fixing price of the companies' shares from buying stocks in a public offer.

However, the employees could apply for shares in that part of the issue reserved for them.

According to fresh guidelines issued by the Department of Public Enterprises (DPE), a full-time director or any employee involved in the decision-making process of fixation of price of an initial public offer (IPO) or follow-on public offer (FPO) of shares of a PSU shall not be allowed to apply for allotment of shares in the issue.

But they can apply for shares of the firm in the category which is reserved for employees, the guideline stated.

The government has been keen on maintaining high corporate governance standards in PSUs. The DPE had issued an office memorandum in 1974, wherein the PSUs were asked to formulate their own employee conduct norms.

The new norms also said all executives or employees including full-time directors of CPSEs who are in possession of unpublished price sensitive information would be prohibited from dealing/transacting either in their own name or through any member of their family in the shares of their own company.