Financial Daily from THE HINDU group of publications
Wednesday, Sep 29, 2004
Financial Daily from THE HINDU group of publications Wednesday, Sep 29, 2004 |
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Regulatory Bodies & Rulings Money & Banking - Private Banks CLB stays all AGM resolutions Our Bureau
Mumbai , Sept. 28 EVENTS at the Aluva-based Federal Bank took a new turn on Tuesday with ICICI Bank, which holds about 20 per cent stake in it, obtaining a stay order from the Company Law Board (CLB) against all the resolutions that were put to vote at the AGM on Monday. Federal Bank has been given time up to October 7 to file the reply, and up to October 15 to file a rejoinder, if any. The hearing will be held on October 18. An ICICI Bank spokesperson said that the CLB, Chennai office issued a stay order on Tuesday evening against these resolutions. The stay order was issued on the grounds that ICICI Bank was not allowed to exercise its full voting rights at the AGM, despite producing a CLB letter permitting it to do so. The Chairman of Federal Bank, Mr K.P. Padmakumar, who presided over the AGM, had "overruled" the CLB letter, the spokesperson said. Of about 44 lakh shares held by ICICI Bank, only 26 lakh shares (11.7 per cent) were allowed for voting. The Chairman held that the erstwhile ICICI had been given permission originally to exercise voting rights only for 26 lakh shares, and not the remaining shares that it had acquired through rights issue. The Chairman had also reportedly asserted that under Reserve Bank of India rules, ICICI Bank was not eligible for the full voting rights. In all, seven resolutions were put to vote. Resolutions seeking appointment of ICICI Bank-supported directors and splitting of the Chairman's post were defeated. Federal Bank is understood to be seeking legal opinion to vacate the stay. Top Federal Bank officials said that they have to study the CLB order to decide on the legal course. However, sources said that the bank may approach the court for vacating the stay. RBI sources said that the Central bank may not be able to intervene in the issue at the moment, as the CLB has intervened . The RBI can enter the picture only when the bank's board seeks its approval on appointment of new directors. Incidentally, ICICI Bank had sought three years' time from the RBI to bring down its stake in Federal Bank. Under the RBI's proposed regulations, ICICI Bank cannot hold more than five per cent stake in Federal Bank.
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