The department of disinvestment (DoD) has asked the department of publicenterprises (DPE) to prepare an ESOP policy. By popularising ESOPs among PSUemployees, the DoD wants to bring down their resistance to the privatisationprocess.

The idea of a trust managing PSU shares seems to have found approval amongofficials. The most important reason for setting up this trust is to avoidheavy selling of shares. Officials foresee the possibility of sellingpressure just after the lock-in period. This would bring down the pricessteeply, they said.

The trust is expected to function on the principle of net asset value (NAV)which would correspond with the share price in the market. It would also doaway with the lock-in period.

Another benefit of the trust, official pointed out, would be that it woulddo away with the discrimination between the present employees and those whojoin later. Any employee could buy ESOPs anytime from the trust, officialssaid.

Yet another positive feature is that money could be paid in instalments forthe ESOPs bought by any employee, officials said.

The DPE, which is under the ministry of heavy industries and publicenterprises, has been asked to prepare the ESOP policy because thedepartment is the nodal agency for all PSUs. The department assists inpolicy formulation pertaining to the role of PSUs.

DoD sources told The Financial Express: "When the employees are given ESOPs,they will find it in their interest that their company is turned around. Andthis can be done only by handing over the management to a competent privateplayer."

Minister of heavy industries and public enterprises Manohar Joshi hasalready conducted a meeting in this regard. An inter-ministerial group issoon expected to be set up to formulate ESOP policy.

The DPE had brought out an ESOP scheme in January 1999 in order to enhanceworkers' sense of belonging to the PSUs. However, the scheme did not takeoff.

Now, the reason for the formulation of ESOP policy and the introduction ofthe golden share concept is same: facilitation of the privatisation process.At the behest of the DoD, the department of company affairs is working on alegislative amendment to the Companies Act.

The concept of golden share has also found the approval of finance ministerYashwant Sinha. If the golden share concept gets Parliament's sanction, thegovernment will be able to sell its entire equity in PSUs without giving upits veto power. For, the golden share will give the government veto powerwhich it can exercise in extraordinary circumstances.