Government revises PSU bonus, dividend, stock split norms after eight years
To issue bonus shares, the PSU's reserves and surplus requirement has been doubled to 20 times its paid-up equity capital, compared to 10 times in 2016.
Government revises PSU bonus, dividend, stock split norms after eight years
The government has revised the capital restructuring norms for Central Public Sector Undertakings (PSUs) for the first time since 2016, in order to align with current market conditions.
Key changes include:
1. CPSEs are now required to pay 4% of their net worth as a dividend, down from the previous requirement of 5%.
2. For PSU Non-Banking Financial Companies (NBFCs), the criterion based on net worth has been eliminated; however, the requirement to pay a minimum annual dividend of 30% of net profit remains in place.
3. PSUs wishing to conduct a buyback of equity shares must now have a net worth of Rs 3,000 crore, an increase from the Rs 2,000 crore threshold established in 2016.
4. The cash reserve requirement for share buybacks has also been raised from Rs 1,000 crore to Rs 1,500 crore.
These changes reflect an effort to keep the norms relevant to the evolving market landscape.
Read Also : TotalEnergies and Oil India Join Forces for Methane Emissions Detection and MeasurementTo issue bonus shares, the PSU's reserves and surplus requirement has been doubled to 20 times its paid-up equity capital, compared to 10 times in 2016.
Public-sector companies planning a stock split will now need to ensure that their market price is 150 times the face value of their equity share, compared to 50 times in 2016. Additionally, there also has to be a mandatory gap of three years before two stock splits for these PSUs, according to the new norms.
Companies like Mazagon Dock recently approved a split of its equity share, where it will divide one share with a face value of Rs 10 into two shares with a face value of Rs 5 each.
Stocks like NMDC also announced a bonus issue of shares along with their September quarter results recently, where the board approved the issue of two free shares for every one share held. This was the first bonus issue announced by NMDC after 2008.
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