The government's plan to offload 25 per cent stake in Bharat Petroleum Corporation Ltd through American depository receipts has hit a roadblock because the corporation's board will be subject to American law.

Any misrepresentation of facts or inaccuracies in accounts subjects the board of directors of a defaulting company to trial in American courts.

"If BPCL adopts the ADR route, this extra-territorial jurisdiction of American law will be foisted on the company's board of directors," a government official pointed out.

This is understood to have caused a flutter in the petroleum and divestment ministries, which are now considering the option of the global depository receipt rather than the ADR route.

The official said the norm was not applicable to a GDR issue. He explained that the route would not make much of a difference in the value of the BPCL scrip.

"This is because the investors in both cases will almost be the same," he said. "Companies across the world are shifting to GDRs from ADRs because of the unjustified rules governing the latter."

An executive with BPCL said the company would have no difficulty in refiguring its accounts according to the general accounting and auditing practices applicable to ADR floats. These norms were tightened after the Enron fiasco.

In another development, the inter-ministerial group is learnt to have shortlisted two companies for appointment of a global consultant for the BPCL float. The names will be forwarded to the Cabinet Committee on Divestment for final approval.

The Centre had earlier invited bids for appointment of a global advisor for sale of its 35.2 per cent stake in BPCL through a public offer.

It plans to offload 10 per cent stake in the public sector oil unit through a domestic offer and another 25.2 per cent through the ADR route. It now holds 66.2 per cent stake in BPCL.

The Cabinet Committee on Divestment has cleared the proposal to offload 34.01 per cent stake in Hindustan Petroleum Corporation Ltd to a strategic partner with management control, and 35.2 per cent stake in BPCL.

Another 5 per cent stake will be offered to employees in the corporations at a concession.