Cabinet draft note issued for selling stake in LIC, bonus shares may be issued along with IPO

Business

 

New Delhi. The Ministry of Finance has issued a Cabinet draft note to sell its stake in Life Insurance Corporation of India (LIC), the country’s largest insurance company. Besides selling its total 10% stake in LIC, it can also issue a large number of bonus shares. The Finance Ministry has prepared the final proposal for the cabinet. There is also a focus on restructuring equity.

 

According to sources, it is possible to keep reserves upto 5 per cent for retail investors and 5 per cent for LIC employees. Meanwhile, a discount of up to 10 percent is possible for retail investors. The 6 major changes will be made in the LIC Act 1956. There are plans to share profits among shareholders and provision of Authorized Capital will be added.

 

Earlier, in regards to selling the government’s stake, Ms. Sitharaman said that listing would bring discipline while giving retail investors an opportunity to participate in wealth creation.

 

However,  Analysts  have called it an interesting part about the proposed listing. The listing would usher in benefits including increased accountability, transparency and due process. There would be independent directors on board who could question the rationale for investments.

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