PFC, REC boards clear merger, seek approval from President

NEW DELHI: The boards of state-run power sector financiers Power Finance Corporation and REC Limited on Saturday decided to move ahead with the proposal to merge the two entities.In separate stock exchan-ge filings, both companies said their boards had cleared reserving the merger proposal for approval of President of India, as required under their Articles of Association.The filings clarified that REC would be merged into PFC under sections 230-232 of Companies Act, 2013. Once the merger becomes effective, all assets and liabilities of REC will be transferred to PFC, and the former will cease to exist as a separate entity.Govt had announced the merger in the Union Budget, with both boards granting in-principle approval on Feb 6.REC said in its exchange filing that the share exchange ratio had not yet been finalised and would be determined by valuers appointed for the purpose. The companies also did not indicate any timeline for completion of the merger or spell out the future management structure of the combined entity.Officials, however, said the merger was targeted to take effect from April 1, 2027, subject to regulatory and govt approvals.Govt holds a nearly 56% stake in PFC and 52.6% in REC, with the remainder held by public shareholders.PFC’s filing indicated that the Centre may infuse capital or issue securities, if required, to ensure the merged entity continues to retain its status as a govt company. The company also said its trading window for dealing in shares and listed debt securities would continue to remain closed until further orders.