Markets regulator Sebi exempted the central government from making an open offer to the public shareholders of Indian Overseas Bank (IOB).
As part of capital infusion into the public sector lender, the government's stake in IOB would increase by more than five percent.
Under Sebi norms, acquiring more than five percent stake in a listed entity would trigger the obligation to make an open offer to the public shareholders.
After preferential allotment of shares, the central government's stake in the bank would increase by 5.98 percent to 79.56 percent.
Giving the exemption, Sebi said there would be no change in control of IOB pursuant to the proposed acquisition as the change would only be in the manner of holding of the shares by the government.
"Further, there will be no change in the number of equity shares held in the target company (IOB), by the public shareholders, pursuant to the proposed transactions," the regulator's Whole Time Member S Raman said.
Sebi also noted that infusion of additional capital would enable the lender to maintain a capital over and above the minimum requirement mandated under Basel III norms.
The capital infusion would provide the target company with additional leverage for raising further equity capital at a later date, as and when need arises, it added.
The exemption is subject to certain conditions, including that public shareholding in the bank "shall be increased to 25 percent within a maximum period of 12 months from the date of the proposed preferential allotment", Sebi noted.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
