Enemy shares sale: Disinvestment dept to frame rules after consultation

The disinvestment department will soon come out with guidelines for sale of 'enemy shares' after consulting enforcement agencies of the revenue department, which have experience in auctioning confiscated properties.

The Union Cabinet, chaired by Prime Minister Narendra Modi, last week gave 'in-principle' approval for sale of shares which are part of 'enemy property'.

Enemy property refers to the assets which were left behind by people who migrated to Pakistan or China and are no longer citizens of India.

Over 6.50 crore shares in 996 companies of 20,323 shareholders are under the custody of Custodian of Enemy Property of India (CEPI), under the Home Ministry. Of these 996 companies, 588 are functional/active companies -- 139 of these are listed, while 449 companies are unlisted.

At the current price, these shares are estimated at around Rs 3,000 crore.

According to sources the guidelines will be framed in consultation with the agencies of revenue department like the Enforcement Directorate as also officials with experience in auctioning of confiscated properties.

Last year in March, Parliament had amended the Enemy Property Act, 1968, to bar successors of those who migrated to Pakistan and China during partition from any claim over the properties left behind in India.

The government has vested these properties with the CEPI. After the India-Pakistan War of 1965, the Enemy Property Act was enacted in 1968 to regulate such properties and list the powers of the custodian.

As the CEPI has no expertise in selling of shares, the government has decided to rope in the Department of Investment and Public Asset Management (DIPAM) for sale of these 'enemy shares', many of which are not even listed on the stock exchanges.

The process for selling these shares is to be approved by the Alternative Mechanism headed by Finance Minister Arun Jaitley and comprising Minister of Road Transport and Highway Nitin Gadkari and Home Minister Rajnath Singh.

The DIPAM will also decide on the modalities for appointing merchant bankers and legal advisors for sale of these shares. "Since this would be the first of its kind share sale, DIPAM would decide whether only one banker would manage all share sale transactions or it needs to be managed by more than 1 merchant banker," a source said.

The proceeds of the share sale will be accounted for as disinvestment proceeds, the source said, adding the process would take time and may spill over to next financial year.

In the current fiscal, the government has targeted to raise Rs 80,000 crore from PSU disinvestment. So far, it has raised over Rs 15,000 crore through PSU share sale.