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Cabinet Empowers PSEs To Divest Subsidiaries Fully Or Partially

For strategic disinvestment, such guiding principles will be laid down by DIPAM. For closure, DPE shall issue guiding principles, it said

Photo Credit : PIB


The union cabinet on Wednesday approved the proposal for empowering the board of directors of the holding parent public sector enterprises to recommend and undertake the process for disinvestment or closure of any of their subsidiaries. 

The process for undertaking the strategic disinvestment transactions, which will be followed by the PSEs, should be open, based on the principles of competitive bidding and consistent with the guiding principles to be laid down," a press statement read. 

For strategic disinvestment, such guiding principles will be laid down by DIPAM.  For closure, DPE shall issue guiding principles, it added. 

Presently, the board of directors of holding parent PSEs have been delegated certain powers under the Maharatna, Navratna and Miniratna categories to make equity investments to establish financial joint ventures and wholly-owned subsidiaries and undertake mergers, and acquisitions subject to certain ceilings of net worth.  

However, the boards do not have powers for disinvestment, closure of their subsidiaries, units, or stake in JVs, except for some limited powers given to Maharatna PSEs for minority stake disinvestment of shareholding in their subsidiaries, the statement said. 

Therefore, approval of the cabinet, CCEA was needed by holding, parent CPSEs, for disinvestment (both strategic disinvestment and minority stake sale), closure of their subsidiaries, units or sale of their stakes in a JV, irrespective of the size of operations, capital deployed of such subsidiaries, etc.  

In line with the spirit of the new PSE policy, 2021 to minimise presence of Government PSEs and for functional requirements, further delegation in this matter has been provided through this decision.

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