The cabinet committee on divestment, which met on Tuesday, approved the guidelines for management-employee bids in the strategic sale of PSUs allowing them to match the highest bid, if they were within the 10 per cent range.

Divestment Minister Arun Shourie said employees would get first preference while bidding for shares, but the final bid would, of course, have to be above the reserve price. However, employees would not be allowed to bid in consortium with other companies.

To ensure that the bids were genuine, there would be a minimum lock-in period of three years. Shourie said they would be allowed to bid directly or in consortium, or by setting up a joint venture or special purpose vehicle with a bank, venture capitalist or financial institution.

But these consortium partners would not be allowed to submit separate bids. The minister said even for such bids the employees would be required to have a controlling stake in the bidding entity and would have to contribute at least 10 per cent of the financial bid.

To ensure that the bids of the employees of the public sector companies were viable, they would be exempted from any minimum turnover criterion. However, the entity would have to satisfy the prescribed net worth criterion and should comprise at least 15 per cent of the total number of employees in a public sector unit or 200 employees, whichever is less.