To allow state-owned power utilities to raise resources, the finance ministry has exempted National Hydroelectric Power Corporation (NHPC) and Rural Electrification Corporation (REC) from having a fixed percentage of independent directors on their boards.
With these exemptions, the road is clear for the two companies to tap the market soon. Sources said the power utilities would also get a go-ahead from the Securities and Exchange Board of India, which, in Clause 49 of its listing requirements, mandates over half the board should be independent directors if a company has a chairman appointed by shareholders. If the board is presided by an independent chairman, the percentage of independent directors needs to be 50 per cent.
Sources said the exemption was being given to these public sector utilities with the rider that they would adhere to the Clause 49 guidelines within 12 months of listing.
Rural Electrification Corporation had filed a draft red herring prospectus in August to raise around Rs 1,200 crore through an initial public offer (IPO) of 156 million shares of Rs 10 each. These shares constitute 20 per cent of the company's existing equity capital.
National Hydroelectric Power Corporation filed papers to raise Rs 3,000 crore in April and is awaiting clearance for its IPO.
Four state-owned power utilities--Power Grid Corporation, Power Finance Corporation, National Hydroelectric Power Corporation and Rural Electrification Corporation--had decided to enter the market early this year. Of these, Power Grid and Power Finance Corporation are now listed.