Shares surge ahead on buy back clearance

Indeed, it recommends that the buyback and intercorporate investment proposals be incorporated into the host of other revisions being planned in the CompaniesAct, and be introduced in the winter session. Since Company Affairs’ Minister M. Thambidurai has been lobbying against giving a blanket approval for share buyback and intercorporate investments, this is seen as an attempt by his ministry to delay matters.

Sources said that as the Prime Minister was in favour of rushing through these measures, he has asked for means to ensure that this is done. It is understood that officials of the law and company affairs ministry have now been asked to work out the modalities. While the official spokesperson was very circumspect on the cabinet decision, highly placed sources said that “there will be meetings at various levels tomorrow to ensure that something is done quickly.”

The government has proposed to amend certain Section of the Companies Act, which will permit the companies to deal in their shares. The need of allowing buying back of shares by companies was felt first in 1983, when London-based businessman Swaraj Paul purchased a large chunk of shares of twoDelhi-based companies and was in a position to take-over.

This measure would also help managements of profit-making companies to increase their holding by purchasing shares from the market.

However, no decision was taken on other measures of the economic package announced by the Prime Minister in his address to the industrialists on Saturday.

The expected decision on the abolition of the Urban Land Ceiling and Regulation Act (ULCRA) was not on the agenda as the minister Ram Jethmalani was not in town. The proposed minority foreign equity stake in the insurance sector was also not taken up though the Group of Ministers lead by Jaswant Singh had given its unanimous decision to the Cabinet last week. The cabinet has approved a proposal for higher rate of pension for those employees, who retired before 1986. Another proposal relating to anomolies of certain clerical staff of railway ministry was also cleared by the cabinet. A proposal for amending the notaries act was also passed.