Sebi exempts govt from open offer to buy UCO Bank shares

Market regulator Sebi today exempted the government from making an open offer after its stake increased by about 8 per cent in UCO Bank through conversion of Rs 1,200 crore worth of preferential shares.
The government, promoter of UCO Bank, has proposed to buy more than 26.20 crore equity shares of the public sector lender through conversion of Rs 1,823 crore Perpetual Non- Cummulative Preference Shares.
The allotment will hike its shareholding in the Bank to 77.20 per cent from 69.26 per cent.
In an order today, Securities and Exchange Board of India said that even after the proposed increase in the shareholding of the government in UCO Bank, the minimum public shareholding "would be maintained".

It said further that there would not be any change in the management control in the bank pursuant to the proposed transaction.
"I am of the considered view that this is a fit case to grant exemption under...The Takeover Regulations to the GoI from the obligation to make an open offer...With respect to its proposed increase of shares/voting rights from 69.26 per cent to 77.20 per cent," Sebi Whole Time Director Prashant Saran said.

The exemption has been granted subjected to conditions that the government or the bank would ensure compliance with the statements, disclosures and undertakings made with regard to the transactions, among others.

The bank had filed an application with the capital market regulator seeking the exemption on behalf of its promoter, the Government of India, on January 18, 2014.
Under Sebi norms, when entities with 25 per cent or more shareholding in a company acquire additional 5 per cent or more equity in that firm, they are required to make an open offer. However, exemptions are made in certain cases.