Financial Daily from THE HINDU group of publications
Tuesday, Dec 28, 2004
Financial Daily from THE HINDU group of publications Tuesday, Dec 28, 2004 |
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Corporate Disputes Corporate - Buyback Reliance board clears buyback, backs Mukesh — Anil abstains from voting Our Bureau
Mumbai , Dec. 27 THE board of directors of Reliance Industries Ltd (RIL), in its first meeting after the feud between the Ambani brothers became public, today attempted to soothe investor anxiety by explicitly backing Chairman Mr Mukesh Ambani as the leader of an undivided business entity. This came on the heels of the differences between the Ambani brothers taking a sharper turn today, with Mr Anil Ambani not only abstaining from voting on the key resolution on buyback of shares but publicly announcing it as inappropriate. "The board reiterated its full faith and confidence in the leadership of Mr Mukesh Ambani, Chairman and Managing Director, to continue to lead the company in a challenging global environment," said a company release. The larger interests of shareholders, employees and other stakeholders will be better subserved only by the company maintaining its present form and structure without any dismemberment, the statement added. The message attempted to be conveyed to investors seemed to be that the differences between the brothers would remain outside the boardroom. Buyback price at Rs 570: The board also approved a price not exceeding Rs 570 a share for buying back equity worth up to Rs 2,999 crore from the market, starting January 10, 2005. The price represents 11 per cent premium over the last one year's average trading price of the stock. The buyback is scheduled to continue till December 26, 2005 and the amount set aside represents 10 per cent of the company's total paid-up equity share capital and free reserves as on March 31, 2004. The board has also formed a committee comprising independent directors of RIL to oversee observance of corporate governance at all levels and to suggest remedial measures wherever necessary. Among other resolutions passed was approval for supplying natural gas to Reliance Energy's (REL) proposed power plant in Uttar Pradesh from RIL's KG basin find. The board decided that RIL would extend "reasonable assistance" to REL "without affecting RIL's operations and projects". Although the company did not elaborate on the nature of this assistance, officials said that this would mean REL would come after RIL in matters of funding and priority. The company also said that the resignation of certain REL directors last month was not at the instance of RIL. Bhakta withdraws resignation: Mr M.L. Bhakta, Director of Reliance Industries Ltd, has withdrawn his resignation. The RIL board took note of a letter from Mr Bhakta reconsidering a request made by him over a month ago to be relieved from the board of the company. A company release said that the RIL board appreciated Mr Bhakta's decision to continue on the board.
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