New Delhi: The boards of state-run power sector financiers Power Finance Corporation and REC Ltd on Saturday decided to go ahead with the proposal to merge the two entities.In separate stock exchange filings, both the companies said their boards have approved reserving the merger proposal for the approval of the President of India, as required under their articles of association.The filing clarified that REC will be merged into PFC under Section 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 had announced the merger in the Union Budget, which was given in-principle approval by both the boards on February 6.REC said in its exchange filing that the share exchange ratio has not been finalized yet and will be determined by valuers appointed for the purpose. The companies did not give any timeline for completion of the merger or 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 holds about 56% stake in PFC and 52.6% in REC, with the remainder held by public shareholders.PFC’s filings indicate that the Centre, if necessary, may infuse capital or issue securities to ensure that the merged entity retains its status as a government company. The company also said its trading window for transactions in shares and listed debt securities will remain closed until further orders.
