Ring-fencing privatisation: Bidders may soon have to give full legal disclosures

The Centre is tightening disclosures bidders must make as it gears up for the next leg of privatisation that will include IDBI Bank. Bidders will have to disclose any legal proceedings they face until the scheduled completion of sale transactions, officials said.

"Bid documents are being amended," a government official told ET, adding that the idea is to seek details about the type of cases they face until the scheduled completion of the proposed divestments.

The bid documents would clearly spell out the kind of legal cases that would turn out to be deal breakers.


The official said the existing bid documents did require disclosures about legal proceedings, but those are now being further tightened to give more clarity to bidders.

This is being done to ensure that a decision by any legal forum does not jeopardise the transaction process at a later stage.

The move comes after a key constituent of the successful bidder for Pawan Hans received an adverse order from the Kolkata bench of the National Company Law Tribunal (NCLT). The transaction process had to be halted and a final call will now be taken on scrapping the bid or going ahead based on the legal opinion.

The NCLT had questioned the financial health of the Cayman Islands-based Almas Global Opportunity Fund SPC (AGOF), the majority stakeholder in Star9 Mobility Pvt Ltd, which had won the bid for Pawan Hans.

The tribunal's order had come in the backdrop of AGOF not paying ₹578 crore to take over EMC Ltd as of April this year after having bid for the company during insolvency proceedings in October 2019, thereby raising questions about its financial viability.

The government wants to be cautious and avoid a repeat as it moves ahead with its strategic sales plan.

It is working on expression of interest for IDBI Bank and could invite bids soon.