Tags:
Journalism of Courage
Companies, investment bankers and their lawyers allege that the reverse book-building process, which gives investors a say in deciding their exit price, is too cumbersome and should be scrapped. They want the system changed. Now listen to what an investor has to say about how companies, especially MNCs, simply kick out small shareholders when they want to delist from the bourses. Investor S. Aiyer says that it is 8216;8216;an open secret8217;8217; that many companies tend to declare huge dividend payouts to themselves once they have thrown out minority shareholders. Consequently, a tiny minority, such as himself, hang on to their shares despite all inducements. But companies have figured out a way of getting rid of these shareholder irritants using a dubious loophole. They convene a general body meeting, which is purportedly attended by 8216;8216;minority shareholders8217;8217; where a proposal for the return and consequent reduction of the minority share capital, is 8216;8216;approved8217;8217; through 8216;8216;special resolution8217;8217;. This is then ratified by the High Court. But in fact, the notice for the EGM selectively weeds out some minority shareholders. Finally, a one-page notice is sent to the shareholders and their shares are wiped out by corporate action. Two multinational companies are in the middle of purging out small shareholders right at this moment. Aiyer says that when he complained to SEBI, he was told that the matter was outside its jurisdiction. One Ashok Jatia has a similar complaint against Triveni Engineering, which he believes has used the negative consent route to deprive him of his shares. Here again, the shareholder says that he never received the notice purportedly sent by the company. Isn8217;t it ironical that companies with lawyers acting as their mouthpiece still manage to convey the impression that they are the aggrieved party and not the investors?
Recovery blues
Tailpiece: The ups and downs in the life of UTI Mutual fund, through its many avatars, are indeed ironical. After the debacle that followed the Scam of 2000, many felt that India8217;s largest mutual fund will never regain investors8217; trust. Four short years later, a television channel adjudged it India8217;s 8216;8216;most preferred mutual fund brand8217;8217;, and exactly a week later the government made an announcement that will kill the brand after a takeover by India8217;s largest bank.
Auditing Sahara
The Reserve Bank of India8217;s RBI decision to order an independent audit by KPMG into Sahara India8217;s Residual Banking operations, has once again raised questions about the whereabouts of the group8217;s high profile chairman Subrata Roy. After a well staged print and television appearance a few weeks ago, the Sahara chairman seems to have gone underground again even as there are major changes afoot in the group structure. Sources close to the group, who helped with its media relations, had told journalists that Roy would meet other media professionals those not in the favoured and trusted list in a few weeks after his first appearance. Instead, Roy is again not to be seen. Sources say that the group is quietly valuing its airline and entertainment businesses and exploring the possibility of either outright sale or collaboration. Meanwhile, it is well known that the Congress-led union government has been taking a keen interest in the Sahara Group. We also learn that the KPMG report has been commissioned after the RBI8217;s own inquiry into Sahara8217;s operations has caused the central bank to worry about some aspects of its business and it is keen on precautionary measures this time.
Email: suchetadalalyahoo.com
