Public sector entities get power to close, divest units

New Delhi: The union cupboard on Wednesday accepted a call to supply extra autonomy to public sector entities (PSEs) by empowering their boards to resolve on the closure and divestment of items or subsidiaries.

The cupboard additionally delegated extra powers to the choice mechanism to accord ‘in precept’ approval for disinvestment and minority stake sale in Maharatna PSUs.

The choice is aimed toward reforming the functioning of PSEs, permitting them better autonomy and serving to the boards to take well timed and speedy monetary choices, an official assertion stated.

This proposal will enable them to well timed exit their investments in subsidiaries, items or joint ventures (JVs), enabling them to monetise their funding at an opportune time or shut their loss-making and inefficient items on the proper time. “It will lead to expeditious choice making and saving of wasteful operational/monetary expenditure by the PSEs,” it stated.

At the moment, the board of administrators of holding or father or mother PSEs have the powers to resolve on fairness investments for establishing JVs and wholly owned subsidiaries and endeavor mergers or acquisitions, topic to a web value threshold. Nevertheless, they don’t have the powers to resolve on disinvestment or closure of their subsidiaries or items or stake in JVs. An exception are Maharatna PSEs which have some restricted powers to resolve minority stake disinvestment of their subsidiaries.

Due to this fact, the Cupboard’s approval is required for each strategic disinvestment and minority stake sale or closure of the subsidiaries/items or sale of their stakes in a JV, no matter the dimensions of operations or capital deployed at such subsidiaries.