public The boards of directors of the sector’s Power Finance Corporation Limited (PFC) and REC Limited have approved the merger plan of the two companies. PFC and REC gave this information in the information given to the stock market. The merger of REC with PFC will create a financial company whose total loan book will be more than Rs 11 lakh crore.
PFC shares will be issued to REC shareholders
According to the scheme and valuation report, as per the share exchange ratio for the proposed merger of REC with PFC, shareholders of REC will be issued 88 shares of face value of Rs 10 each of PFC for every 100 shares of face value of Rs 10 each. These shares will be issued to those shareholders who hold shares of the company on the record date to be decided by the boards of PFC and REC.
The merger of both the companies will take place under Section 230-232 of the Companies Act, 2013.
This merger will be done under Section 230-232 of the Companies Act, 2013 and other applicable provisions, in which the relevant shareholders and lenders are also included. This merger is dependent on many conditions. These include approval from shareholders and lenders of both the companies and approval from all relevant regulatory and government authorities.
PFC and REC issued joint statement
According to the joint statement of both the companies, the merged company is required to maintain the status of ‘Government Company’ under the Companies Act, 2013 and the Government of India is also required to retain (directly or indirectly) majority of the voting rights and control in the merged company.
Both government companies appointed advisors for different responsibilities
Deloitte Touche Tohmatsu India LLP is acting as deal and tax advisor and Cyril Amarchand Mangaldas legal advisor for both PFC and REC. Additionally, PFC had appointed RBSA Valuation Advisors LLP and REC had appointed E&Y Merchant Banking Services LLP to provide a joint valuation report. Along with this, PFC had appointed SBI Capital Markets and REC had appointed Nuvama Wealth Management to give their respective views on the joint valuation report.
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