MUMBAI, August 19: Asian Paints has rejected an application by Kotak Mahindra Capital Company to transfer shares amounting to around 4.6 per cent of the company's stake. A communication to this effect was sent to Kotak Mahindra today.After a failed takeover bid by ICI, Kotak Mahindra - which held the shares in ICI's behalf - sent in 4.6 per cent of Asian Paints' stake for transfer in its own name last month. In a written reply, Asian Paints said that the shares were sought to be transferred to Kotak Mahindra after a takeover bid was made by British paints major, ICI Plc, was foiled. ``The purchase consideration for Kotak Mahindra appears to be sourced from ICI Plc, the Asian Paints board has rejected the transfer,'' Asian Paints said.It called the Kotak deal as `benami' and `sham'. The board has also alleged that the shares are part of the ICI acquisition made in breach of the Sebi regulations and RBI permission to Kotak Mahindra, in addition to violating the Benami Transaction Prohibition Act,1988.These shares remained with Kotak Mahindra after it sold out another 4.5 per cent to Unit Trust of India, out of a total 9.1 per cent that had fallen into its hands when the Asian Paints board did not allow transnational competitor ICI Plc to buy into the company. ICI had sought to pick up the shares from former promoter Atul Choksey with Kotak brokering the deal.``In taking the decision to reject the transfer application, the board strongly reinforces its commitment to its stakeholders," company sources said. "The entire consideration for the purchase of the shares was brought in by KMCC as advance from ICI Plc for investment in Asian Paints shares. Under an RBI permission as a condition for permitting KMCC to bring in the advance it was stipulated that in the event of the transaction not materialising the advance would be refunded to ICI Plc,'' sources said.The RBI permission was originally valid for four months and the board of Asian Paints was not aware whether the permission had beenextended and whether KMCC has, in fact, refunded the advance as stipulated, sources said. "The entire consideration for the purchase of the said shares having come from ICI Plc," they said.
