NEW DELHI: The boards of state power sector financiers Power Finance Corporation and REC Limited on Saturday decided to go ahead with the proposal to merge the two entities.In separate stock exchange filings, the two companies said their boards of directors have agreed to reserve the merger proposal for approval by the President of India, as required under their articles of association.The filings explained that REC will be merged into PFC under Sections 230-232 of the 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.The government announced the merger in the Union Budget, with both houses giving in-principle approval on February 6.REC said in its exchange filing that the share exchange ratio has not yet been finalized and will be determined by valuers appointed for the purpose. The two companies also did not indicate any timetable for completing the merger or clarify the future management structure of the combined entity.However, officials said the merger was targeted to take effect from April 1, 2027, subject to regulatory and government approvals.
The government owns approximately 56% of shares in PFC and 52.6% in REC, with the rest owned by public shareholders.The Center may infuse capital or issue securities, if necessary, to ensure that the merged entity continues to retain its status as a government company, the PFC filing noted. The company also said that its trading window for dealing in listed stocks and debt securities will remain closed until further orders are received.