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Sebi exempts govt from open offer to Canara Bank shareholders

In September, the finance ministry had decided to infuse Rs 6,571 crore in the lender.|
Nov 28, 2019, 06.22 PM IST
Canara Bank Bccl 1200
Mumbai: The Securities and Exchange Board of India (Sebi) in an order on Thursday exempted the government from making an open offer to shareholders of state-run lender Canara Bank, after the proposed equity infusion which would increase its stake in the lender by 7.9 per cent.

In November, the bank had filed an application on behalf of its promoter -- Government of India -- seeking exemption from the applicability of SAST (Substantial Acquisition of Shares and Takeovers) or Takeover Regulations.

In September, the finance ministry had decided to infuse Rs 6,571 crore in the lender through a preferential allotment of shares, which was a part of government's programme to boost banks’ capital base for meeting Basel norms.

At present, the government holds 70.62 per cent stake in Canara Bank and the proposed allotment of 27,69,88,576 equity shares of the lender would increase its stake by 7.9 per cent to 78.52 per cent, which would trigger a mandatory open offer under the takeover regulations.
Also, the public shareholding in the bank will decrease from 29.38 per cent to 21.48 per cent.

The markets regulator noted there would be no change in the government’s management control on the lender or the number of shares held by public post the proposed acquisition.

“There will be no change in control of the Target Company pursuant to the Proposed Acquisition as the change will only be in the quantum of shares held by the Proposed Acquirer,” Sebi noted in an order.
“Further, there will be no change in the number of equity shares held by the public shareholders in the Target Company pursuant to the Proposed Acquisition,” the regulator added.

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