SEBI Exempts Government From Making An Open Offer to Shareholders of VIL

The market regulator, Sebi, on Wednesday, exempted the government from making an open offer to shareholders of Vodafone Idea Ltd (VIL) under a plan to buy back more than 33% of the telecom operator's capital in the process. 

While giving the exemption from making the open offer SEBI said, “Moreover, GoI has no intent to participate in the management or the Board of the VIL and there is going to be no change in control of the VIL. Further, such holding of GoI shall be classified as public shareholding.”

In the nine-page order, Sebi said the acquisition of shares by the Government of India (GoI) is proposed for the sole purpose of attracting broader public interest. The regulator noted that a substantial sum must be paid by VIL to the government, which could strain the company's finances.

According to regulations, the unit that owns 25% or more of the capital of a listed company must make an open offer to the shareholders of the company.

As part of a bailout of the heavily indebted telecom sector, last September the government gave telecom operators the option of paying four-year deferred interest on universal payments on deferred spectrum installments and AGR fees by converting contributions into equity.