The recent amendment was done by following the less number of trackers among the bidder because of the rule that put severe restriction on bankers. Therefore, the new rules are formed to impose less restriction on bankers dealing with companies that are in same business as the divesting entity.
The memorandum declaring the amendment stated, “The interested parties would also be required to submit a list of or disclose any mandated transactions, which are in the same line of business as that of the company (being disinvested)."
The amendment took place after a revise request for the initial public offering (IPO) of National Building Construction Corp Ltd. was proposed by the Department of Disinvestment. Therefore, as per the new rule, the bidder bankers would now only have to submit an application in writing in order to confirm that they do not have any conflicts of interest as of the date of submitting their proposal for appointment.
Besides, the confirmation, the new rule also demands them to undertake that “in future, if such a conflict of interest arises, the adviser would immediately intimate the government/company (being disinvested) of the same".
The rule is being amended against the previous rule which demanded the bankers to submit an undertaking assuring that they were not involved in transaction in the same line of business at the time of bidding for the divestment mandate.
The rule further made it necessary for the banks to seek prior government approvals for taking any new mandate in the same line business. The rule went ahead by ruling out 22 top investment banks dealing with other real estate issues from bidding for NBCC IPO mandate; as a result, despite the extension of the initial deadline from May 26 to June 10, the rule was forced to change by the department of disinvestment. However, currently the date has further been extended to June 15.
View: This is a welcome move of the government. There cannot be a case of conflict of interest as it has been in the past.