Coal India gets Sebi exemption for share buy back programme

Markets regulator Sebi Wednesday exempted state-owned Coal India from complying with regulations with regard to its proposed buyback programme for 4.46 crore shares. 

Coal India had filed an application on February 12 with the Securities and Exchange Board of India (Sebi) seeking exemption from the strict enforcement of the buyback norms.

The application has been necessitated on account of transfer of 4,46,80,850 equity shares of Coal India which were held by the promoter (government), to the asset management company of the Bharat 22 ETF in the month of February, according to a Sebi order.

The promoter (Government of India) said additional offering period of Bharat 22 ETF was opened and closed on February 14, 2019.

It is noted that the proposed transfer equity shares by the promoters will occur during the period between the date of passing the resolution of the board of directors approving the offer of buyback of securities of the company (i.E. February 4, 2019) and the closure of such offer, Coal India said.

Under buyback regulations, it imposes an obligation on the company to ensure that its promoters do not deal in the shares of the company in the stock exchange or off-market including inter-transfer of shares among themselves during the period from the date of passing the resolution of the board of directors till closing of the buyback offer.

On February 4, Coal India's board had approved the buyback of 4.46 crore equity shares, representing about 9.86 per cent (stand alone basis) of aggregate of fully paid up equity capital at a price of Rs 235 per equity share for an aggregate consideration of Rs 1,050 crore. 

The PSU in its application said that in the proposed buyback, 15 per cent of the number of equities will be reserved for small shareholders which will benefit larger number of such small shareholders.

"The transfer of securities from the promoters to Bharat 22 ETF scheme being part of an ongoing disinvestment programme, I do not find it appropriate to stop the proposed buyback if it is otherwise for the benefit of the shareholders of Coal India," Sebi Whole Time Member G Mahalingam said in a Wednesday order. 

Accordingly, it grants relaxation to Coal India from ensuring compliance with the Buyback Regulations, 2018 in relation to the proposed buyback of 4,46,80,850 equity shares, Sebi said.