Sebi approval for LIC as IDBI Bank public shareholder after divestment

SEBI has approved reclassification of LIC as a public shareholder in IDBI Bank following strategic divestment, subject to curbs on voting rights and board representation

Capital markets regulator Securities and Exchange Board of India (Sebi) has given green light to classify Life Insurance Corporation of India (LIC) as a public shareholder of IDBI Bank for its residual stake on completion of strategic divestment in the lender.

 

The reclassification as public shareholder is subject to fulfilling the conditions relating to the transaction.

 

Mumbai-based IDBI Bank, in a filing with BSE, said the Department of Investment and Public Asset Management (Dipam) informed that Sebi has approved reclassification of LIC as public shareholder.

 

One of the conditions that LIC would have to fulfil is that its voting rights shall not exceed 10 per cent of the total net effective voting rights of IDBI Bank. LIC cannot exercise control over the affairs of the bank, directly or indirectly.

 

 

LIC may not have any special rights relating to IDBI Bank, through any arrangement, including shareholders agreements.

 

The insurer would not have representation, including nominees on the Board of directors at IDBI Bank.

 

The reclassification of LIC as “public” shareholder post disinvestment would stand withdrawn automatically if the insurer fails to comply with any of the specified conditions.

 

Post completion of the strategic disinvestment transaction, LIC would have to bring down residual shareholding in IDBI Bank to 15 per cent or below within two years as directed by the Reserve Bank of India (RBI).

 

The Centre and LIC together hold 95 per cent stake in IDBI, of which 60.72 per cent is on the block.

 

The qualified bidders have begun due diligence and will finish the exercise by September.