The Cabinet Committee on Economic Affairs (CCEA) will take up tomorrow the issue of ‘survivability’ of the call-option provision of shareholders’ agreement entered into at the time of strategic sale of central public sector undertakings during 2000-03.
A call option gives the buyer the right, but not the obligation, to buy a specific futures contract at a pre-determined price within a limited period of time, in accordance with a shareholder agreement. The span of time for which the option is valid can be referred to as the ‘survivability’ period.
State-owned firms like Videsh Sanchar Nigam Ltd (VSNL), Paradip Phosphates Ltd (PPL), and Jessop and Company were divested between 2000 and 2003. The matter was referred to a group of ministers after the Department of Disinvestment sought legal opinion on the issue.
The Centre at present owns a 26.1 per cent stake in VSNL, 26 per cent in PPL, and 27 per cent in Jessop & Co Ltd.
The issue came into prominence after Sterlite Industries, which bought 51 per cent of Balco, wanted to exercise its call option under the shareholders’ agreement and tried to buy the residual 49 per cent stake.
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