The Gujarat government has recently introduced new regulations mandating minimum requirements for dividends, issue of bonus shares, buybacks, and share split for the state PSUs.
These guidelines apply to all corporate bodies where the government of Gujarat and the government-controlled body corporate have controlling interest.
The state PSUs must offer a minimum dividend of 30% of profit after tax, or 5% of net worth, whichever is higher. In addition, every state PSU with at least ₹2,000 crore net worth and cash and bank balance of ₹1,000 crore will have to exercise the option of buyback of its own shares.
The PSUs are also required to issue bonus shares to shareholders if they have defined reserves and surplus equal to or more than 10 times their paid-up equity share capital. Furthermore, the PSUs are mandated to split their shares where the market price or book value of the shares exceeds 50 times its value, provided the existing face value of the share is more than ₹1.
The guidelines aim to comprehensively address the capital restructuring needs of PSUs, as per the State government statement.