Shareholder complains about irregularities in election process to the post of shareholder director of the State Bank of Bikaner and Jaipur
A complaint has been registered with the State Bank of Bikaner and Jaipur (SBBJ) against the election of Kunal Dalmia as shareholder director of the bank. The complaint by Mukesh Bansal, who is a shareholder, raises questions about the eligibility of Mr Dalmia and the manner in which the election process was conducted.
The complainant, Mr Bansal has alleged that Mr Dalmia is a defaulter and did not meet the 'fit and proper' criteria laid down by the Reserve Bank of India (RBI) for such a post. He says also that the proxy applications filed by several institutional shareholders were rejected on unexplained grounds, although they were lodged in time with valid documentation.
When Moneylife asked SBBJ about the complaint, an official said that the matter has been referred to the parent bank, the State Bank of India, which will constitute a committee to investigate the allegations.
Mr Dalmia was elected to the post of director of the bank for a period of three years, at a general meeting on 11 August 2010. Mr Dalmia replaces Dr Sanjiv Agarwal who completed his term on that date.
It appears that the bank did not carry out the required due diligence while deciding on the candidature and appointment of Mr Dalmia as shareholder director. According to the guidelines of the Reserve Bank of India (RBI), the Nomination Committee of the bank is required to meet and decide whether the person's candidature is acceptable, based on a broad criteria which includes educational qualifications, field of expertise, experience, track record and integrity.
The bank is required to undertake a process of due diligence to determine the 'fit and proper' status of the existing elected directors/persons to be elected as director under section 25 (1)(d) of the SBI (Subsidiary Banks) Act, 1959.
Mr Bansal, who works with NIIT, has complained that Mr Dalmia concealed material information (that should have been given in the nomination form) which has been reported on the websites www.watchoutinvestors.com, www.reportjunction.com, www.sbec.gov.in/defaulters/kerla-1.htm. Mr Bansal has also accused SBBJ of failing to obtain independent verification or confirmation from various regulating agencies, besides taking a confirmation from the candidates.
Mr Bansal has also questioned procedural aspects of the election which seem to have directly and substantially affected the election. Giving an example, Mr Bansal says that proxy documents from one of India's largest mutual funds and a shareholder of SBBJ, UTI-Unit-linked Insurance Plan, which has 2,63,300 shares of SBBJ, were rejected on unexplained grounds, even though they were lodged in time and had valid documentation. Besides, the bank didn't convey the status despite repeated follow-ups in person and over the phone. UTI is understood to have filed objections to the rejection of their proxy.
It is understood that the proxy or authorisation documents of some other eligible shareholders of the bank were also rejected and that despite follow-ups with the bank authorities no reason was given to these entities for the rejection, till the commencement of the general meeting. Among these entities are India Capital Fund Ltd (holds 10,00,010 shares), India Institutional Fund Ltd (1,86,700 shares) and India Capital 1 Opportunities Ltd (1,82,550 shares).
Mr Bansal says that that the procedure adopted by the bank for scrutiny of the nomination forms and the election process was not fair and transparent and appears to have favoured a particular candidate. In the light of these issues, he has requested that the candidature of Mr Dalmia be declared null and void and that he should be disqualified.
Seoul: World Trade Organisation (WTO) chief Pascal Lamy urged Group of 20 (G20) leaders today to make a big push for the conclusion of the Doha round of global trade talks at their summit in November, reports PTI.
The Doha round may be completed next year, he told reporters after talks with South Korean president Lee Myung-Bak and trade minister Kim Jong-Hoon to discuss the agenda for the Seoul get-together.
Leaders of the world's 20 advanced and developing nations said in 2008 that they would reach agreement by the end of the same year on a broad outline of the final trade liberalisation deal.
But the Doha talks remain mired in disagreements over tariff cuts and reductions to farm subsidies. G20 leaders had set a goal to wrap up the trade negotiations this year.
"We all know that this will not happen before the end of this year," Mr Lamy was quoted by Yonhap news agency as saying.
He said the November summit may push the trade talks forward, adding "maybe next year, depending on the progress made in the Seoul summit."
"A substantial engagement among leaders is the right thing in order to pave the way for the conclusion of the round," Mr Lamy was quoted as saying.
"We need compromising on all sides ... a bit more to conclude the round, not much more."
Mr Lamy also said the WTO has stepped up efforts in working with Seoul to speed the Doha round, according to Yonhap, as Lee seeks to use the summit to add momentum to its conclusion.
He also said trade volume would increase at least 10% this year, although there are still lingering downside risks to the global economy.
In a blatant violation of SEBI regulations, promoters diluted stake in the company without seeking shareholder approval and in violation of the SEBI takeover code; shares were offloaded to entities acting in concert, jacking up share prices amid a flurry of announcements
In another exhibition of how small shareholders continue to be taken for a ride by promoters, it has come to Moneylife's attention that the promoters of little-known company Vishvas Projects Limited (VPL) substantially diluted their stake in the company to a few entities, without seeking shareholder approval. These entities in turn acted in concert with each other to influence its share price, only to offload the shares at prices jacked up multi-fold through a series of questionable announcements to the public.
Moneylife has access to a complaint made to the regulator detailing the complainant's observations about VPL's actions, which violate provisions of the SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 1997, SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Stock Market) Regulations 2003, as well as the stock exchange listing agreement and the Companies Act, 1956.
The complainant has pointed out that the company promoters have sold their holdings and almost exited from the company and new entities having acquired management control. All this has been done without taking requisite approval of shareholders and without giving them an exit opportunity as envisaged under SEBI takeover guidelines. After the acquisition of these shares by the new entities, the trading in the scrip witnessed a sharp rise as its price shot up in sharp contrast to the fundamentals of the company. By instrumenting the sharp spike in share price and volumes, these entities exited the company, offloading their shares to the general public in direct violation of SEBI (PFUTP) Regulations 2003.
Here is the sequence of events. Earlier known as Mefcom Agro Industries Limited, the company name was changed to Vishvas Projects Limited in 2006 (it still appears as Mefcom Agro on the BSE website). As of March quarter 2006, the company promoters, Mefcom Capital Markets Limited and Vijay Mehta together held an aggregate of 49.49% shares in VPL. However, during the period April 2006 to September 2007, the management and shareholding underwent rapid changes as evident from the announcements made by the company in the shareholding pattern. During this period, the promoters diluted their holding to less than 0.51%, new directors were appointed on the board of the company and the objects of the company also underwent a revision - all without seeking shareholder approval.
Between April and June 2006, the shareholding of corporate bodies in the company increased from 5.31% to 46.26%. The entities involved were Master Finlease Ltd, Cosmo Corporate Services Ltd, ISF Securities Ltd, Vishvas Securities Ltd, Pioneer TCP Stock Brokers Ltd, SIC Stock & Services Pvt Ltd, Integrated Master Securities Pvt Ltd and Sam Global Securities Ltd. It has been found that these 8 entities who acquired 43.42% shares in the company during the June 2006 quarter were in fact associated with each other and hence, the acquisition so made was in violation of SEBI (SAST) Regulations.
The relationship between the entities establishes the fact that they acted in concert with each other, apart from having a common business of broking and investments in shares. As per SEBI regulations, any person who together with a person acting in concert acquires shares of a company in excess of 15% is required to make a public announcement. However, no such announcement was made by said entities.
The complainant has also alleged that the company promoters and shareholders were involved in blatant manipulation of share prices. There is a substantial change in the price and volumes of the company scrip after the change in management control. During the period from 3 October 2006 to 9 January 2007, there was a sharp spike in share price from Rs18.90 to Rs206.70, translating into an 11 times increase in the share price of the company.
Interestingly, during the same period, VPL made as many as 21 announcements to the public. These were in regard to various investment proposals by way of acquisition of stakes in different ventures, increase in authorised share capital, preferential allotments to various entities that were misleading to the investing public as this information could not be substantiated by any actual developments.
The entities who had acquired the shares previously greatly benefited from the interest generated in the company's scrip as a result. They subsequently offloaded their shares to the public at much higher prices. The shareholding of these corporate bodies went down from 43.42% in June 2006 to 14.65% by March 2007.
A complaint has been made to SEBI requesting a detailed investigation into the acts of the company's promoters, management and related entities.