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DIPAM Introduces Revised Capital Restructuring Guidelines for Central Public Sector Enterprises (CPSEs).

National | Dated: 27 Nov 2024

The Department of Investment and Public Asset Management (DIPAM), Ministry of Finance (MoF), has issued revised capital restructuring guidelines for Central Public Sector Enterprises (CPSEs) to enhance operational flexibility, shareholder returns, and value creation, reflecting market and regulatory changes since May 2016.

🎯 Key Highlights:

- These guidelines, effective from Financial Year 2024-25 (FY25), exclude Public Sector Banks (PSBs), insurance companies, and entities restricted under Section 8 of the Companies Act, 2013.
- The guidelines will also apply to subsidiaries of CPSEs, where the parent CPSE holds more than 51% stake.
- CPSEs must pay a minimum annual dividend of 30% of Profit After Tax (PAT) or 4% of net worth, whichever is higher (previously 5% of net worth).

💡 Other Important Facts:

(i) CPSEs with a net worth of ₹3,000 crore, cash reserves over ₹1,500 crore, and trading below book value for six months may consider share buybacks. Additionally, CPSEs should issue bonus shares to enhance liquidity if their reserves are 20 times their paid-up equity capital.
(ii) Listed Central Public Sector Enterprises (CPSEs) with market prices exceeding 150 times the face value for 6 months may split shares, subject to a 3-year gap between splits, and can distribute interim dividends quarterly or biannually, ensuring 90% of the projected annual dividend is paid before the September AGM.
(iii) The Committee for Monitoring of Capital Management and Dividend by CPSEs (CMCDC), chaired by DIPAM Secretary, will oversee capital management and restructuring discussions.

📚 Test Your Knowledge:

Which department recently introduced the revised capital restructuring guidelines for Central Public Sector Enterprises (CPSEs)?

Correct Answer: DIPAM

🚀 Quick Recap:

About MoF

Cabinet Minister : Nirmala Sitharaman
Headquarters: New Delhi