DMPQ- Explain following terms: a) Disinvestment b) Strategic Disinvestment c) Privitisation d) Offer for sale e) Cross Holding

a) Disinvestment: Disinvestment means sale or liquidation of assets by the government, usually Central and state public sector enterprises, projects, or other fixed assets.The government undertakes disinvestment to reduce the fiscal burden on the exchequer, or to raise money for meeting specific needs, such as to bridge the revenue shortfall from other regular sources.

b) Strategic disinvestment: Strategic disinvestment would imply the sale of substantial portion of the Government share holding of a central public sector enterprise (CPSE) of upto 50%, or such higher percentage as the competent authority may determine, along with transfer of management control.”

c) Privatisation: It means a transfer of ownership, management, and control of public sector enterprises to the private sector. Privatization can suggest several things including migrating something from the public sector into the private sector.

d) Offer for sale: An Offer for Sale is a mechanism where promoters in a listed company sell their shares directly to the public in a transparent manner. This mechanism was first introduced in the market by SEBI in 2012. Through this process, promoters in public companies can sell their shares and reduce their holdings from publicly-listed companies.

e) Cross Holding : Cross holding is a situation in which a publicly-traded corporation owns stock in another publicly-traded company. So, technically, listed corporations own securities issued by other listed corporations.

 

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