The Hindu Business Line : CLB suspends Tamilnad Mercantile Bank board

WITH a firm view that it was in public interest to take remedial measures in the matter of Tamilnad Mercantile Bank Ltd (TMB), the Company Law Board (CLB) on Friday ordered suspension of TMB's board of directors with immediate effect.

"Everyone of the present directors is restrained from discharging any function relating to the affairs of the Bank," the bench said.

However, to ensure that during the period of suspension the work of the bank continues, the Additional Principal Bench of CLB, comprising Mr S. Balasubramanian, Chairman, and Mr K.K. Balu, member, said, "We appoint a committee comprising Mr N.R. Krishnan, Mr N.R. Sridharan, Mr B. Ramani Raj and Mr George John. This committee will have the powers of the board. However, no policy decision will be taken by this committee."

Further, the Chairman-cum-Managing Director (CMD) of TMB will function "under the control and superintendence of this committee," the bench said.

The CLB bench also stated that the committee would try to meet at least once in a week to review the functioning of the bank. It would also interact with the investor forum to ensure that CLB's directions relating to distribution of share certificates are complied with.

"After January 25 and before February 1, 2004, the committee would ensure preparation of full and complete list of shareholders eligible to vote in the AGM. The voting on shares in respect of which share certificates had not been distributed by January 25, 2004 will be frozen," the bench said.

The bench was considering the application of the Union Government to supersede the TMB board. The bench noted that till November 25 all decisions in the board meeting were taken in the presence of the Reserve Bank of India and Union Government nominees on the board of the bank. However, the situation changed at the board meeting on November 25. The board of directors, in spite of the nominees of the Centre and RBI expressing caution regarding the proposal to remove the CMD, Mr R. Natarajan, approved the proposal after the nominees had left the venue of the meeting.

"Taking such an important decision without the participation of these nominees has made the presence of the nominees on the board redundant," the bench noted.

As far as the delivery of share certificates is concerned, the bench said that the investor forum should try to complete it by January 5, 2004.

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