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NEW DELHI, April 16

THE Cabinet Committee on Disinvestment (CCD) approved guidelines for management-employee bids in strategic sale of public sector undertakings stating that employee participation and protection of employee interests was a key concern of the disinvestments process.

As per the guidelines, if the employee bid is not the highest one, they shall be considered only if the bid is within the 10 per cent range of the highest bid. In such an event, the employee bid will have the first option for acquiring the shares under offer provided they match the highest bid which is equal to or more than the reserve price set by the Government. The shares so acquired by the employees will have a lock-in period of three years.

If the employee bid is not the highest bid and there are more than one employee bids within the 10 per cent band, the highest of the employee bids will have precedence for purchase at the highest bid.

However, if such employee bidder is unwilling or unable to match the highest bid, the option will pass on to the next highest employee bid and so on till all the employee bids within the 10 per cent band are exhausted.

In the event of no employee bidder within the 10 per cent band, being willing or able to match the highest bid, the shares under offer will be sold to the highest bidding entity.

For the purpose of evaluating employee/management bids, the term `employee' will include all permanent employees of a PSU and the whole-time directors on its board. " A bid submitted by employees or a body of employees will be called an employee bid", a Disinvestment Ministry statement said.

In order to be eligible for bidding, atleast 15 per cent of the total number of employees in a PSU or 200 employees, whichever is lower, should participate in the bid.

The employee bids will be exempted from the minimum turn-over criteria but will be required to qualify in terms of the prescribed net worth criterion.

The employees can either bid directly and independently or, for the purpose of meeting the financial criteria like net worth, can form a consortium or bid through a joint venture or a special purpose vehicle alongwith a bank, venture capitalist or a financial institution. However, employees will not be permitted to form consortia with other companies.

If the bidding entity of the employees is a consortium, JV or SPV, employees must have a controlling stake and be in control of the bidding entity. And, if the bid is submitted through a consortium, JV or SPV, the employees must contribute atleast 10 per cent of the financial bid.

If the employees form a consortium, the consortium partners would be prohibited from submitting individual bids independently.

The employees bid will be required to follow the procedures prescribed for participation by Interested Parties in the process of strategic sale including, but not limited to, filing expressions of interest alongwith all details as applicable to other investors including furnishing of bank guarantee for payment of the purchase price.

The guidelines is expected to be applied in the case of privatisation of Manganese Ore (India) Limited (MOIL) where employees have evinced interest to acquire the company from the Government.

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