The Cabinet Committee on Privatisation (CCoP) has decided to transfer bonus shares to trusts registered under Benazir Employees Stock Option Scheme (BESOS) despite opposition by the Privatisation Commission (PC) and Finance Division, sources close to Minister for Privatisation told Business Recorder.
CCoP which met on March 8, 2011 under the chairmanship of Minister for Finance, Dr Abdul Hafeez Shaikh, took this decision while considering a summary of the PC titled Benazir Employees Stock Option Scheme-implementation. The sources said PC apprised the CCoP that the cabinet in its meeting held on 5th August 2009 approved BESOS for the employees of state owned entities/other GoP shareholding through transfer of 12% of GoP shareholding and a seat on the Board of Directors (BoDs).
The task of implementation of BESOS was entrusted to Privatisation Commission (PC) which identified eighty (80) such entities, including Pakistan Petroleum Limited (PPL).
The PPL, Employees Empowerment Trust (PPLEET) was registered through a trust deed in September 2009. Twelve percent GoP shareholding in PPL was transferred to the trust and unit certificates were transferred to the employees on basis of their service. 50% dividend received on 12% GoP shareholding was distributed among the employees whereas the remaining 50% was received by the PC in the Central Revolving Fund (CRF) from the trust for payment of compensation claim against the surrendered unit of employees.
It was revealed that PPL trust retained the 50% bonus shares declared by the company on 12% GoP shareholding and submitting the compensation claim against surrendered unit certificates enables it for bonus shares on the basis of PPLEET trust deed which mentions dividend in kind and cash.
The CCoP was informed that no such condition has been mentioned in the other registered trust deeds. It was observed by CCoP that the transfer of bonus shares to the trust would increase the number of shares and resultantly the Finance Division will have to provide additional funds for payment to employees in case of their surrender.
According to sources PC requested CCoP to confirm the position that only cash dividend is authorised for the benefit of the employees under BESOS approved by cabinet. After detailed discussion on the issue, the CCoP directed to transfer bonus shares to trusts registered under BESOS scheme in respect of PPLEET and other entities.
The CCoP also directed the PC to bring forward a document featuring highlights of the BESOS scheme and inform the committee regarding the total impact of the scheme including impact of bonus shares to be transferred to the trust.
The sources said, workers of different corporations are pressing the government to transfer 12 per cent bonus shares to the trusts but PC was opposing the move on behalf of corporations. Ultimately the CCoP approved the proposal of workers despite a no from PC and Finance Division. Eight corporations have already paid Rs 2.157 billion to their employees under the BESOS.