Coal India Limited, a state-owned company was exempted by SEBI from complying with the regulations of the buyback program for ₹4.46 crore shares. On 12th February, 2019 Coal India had filed a complaint with the market regulator, SEBI. The complaint stated an exemption from the strict enforcement of the buyback norms.

INTRODUCTION

4,46,80,850 share of Coal India were held by the promoters of the company which is the government. The application stated the transfer to these shares to the asset management company – Bharat 22 ETF. This transfer will occur between the period when the Board of Directors approve the offer of buyback of the securities of the company and at the closure of the offer. Subsequently, this was on 4th February, 2019. An additional offer period for opening of Bharat 22 ETF and it closed on 14th February, 2019.

BUYBACK REGULATION

According to the buyback regulation, there is restriction to the promoters of the company to deal in the shares of the company in the stock market. Dealing should also not take place off-market including inter-transfer of shares among themselves. This restriction remains until the Board of Directors approve the offer of buyback and the closure of the same.

APPROVAL OF BUYBACK BY THE BOARD

On 4th February, 2019 the Board of directors of Coal India Limited approved the buyback of 4.46 crore equity shares. It represented around 9.86% (stand alone basis) of the aggregate of fully paid-up share capital of the company. The price of each share was ₹235 which amounted to an aggregate of ₹1,050 crore approximately.

BENEFIT OF RELAXING THE BUYBACK PROGRAM

According to the application of Coal India, A reservation of 15% of the number of equities will be for the small shareholders. Moreover, This reservation will benefit a large number of the small shareholders. The transfer of shares from the promoters (government) to Bharat 22 ETF will increase the disinvestment of the government. However, it will be beneficial for the shareholders of Coal India Limited.
Meanwhile, on 21st February, 2019 at 1:00 pm Coal India Limited is trading at ₹213.85 down by 0.51%.

Coal – India’s traditional energy source

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