The Hindu Business Line : Great Offshore board may not discuss new MD issue

Kolkata March 20 The board of Great Offshore Ltd (GOL), which meets on Wednesday, is not likely to discuss the reappointment of Managing Director, Mr Vijay K. Sheth, whose tenure expires on March 31. The agenda for tomorrow's board meeting , which has already been circulated among the eight directors, including the MD, mentions interim dividend for the year 2006-07 as the main subject. A few more items are also scheduled for discussion, but not the tenure issue, sources close to the development confirmed to Business Line.

Experts, however, feel that the board could still discuss this important subject even if it is not on the agenda, if the Chairman so desires.

According to corporate law experts, if the board does not take any decision on the reappointment by March 31, the office of MD would fall vacant and the six-member management committee (including Mr Seth) has to take charge of the company.

Mr S. Murlidharan, an independent company law expert, said, "It is now a settled law that a director, including an MD, cannot overstay. He, therefore, vacates the moment his tenure is over, unless reappointed.

"At best, the company (with share capital of more than Rs 5 crore) may have to pay the small penalty under section 629A of the Companies Act — the omnibus residual section for defaults — should it fail to fill the vacancy in the office of MD," he added.

According to Mr N.R. Sridharan, former director in the Union Ministry of Company Affairs, if the board does not take a decision then it can be assumed that it is still undecided.

However, it is felt that a meeting in the next 10 days can avert a vacancy in the office of MD.

De-merger conditions

Mr Sheth was appointed "as whole-time director designated as managing director" of Great Eastern Shipping in 2002 for a five-year term beginning April 2002. When GOL was de-merged from GE Shipping last year, the Scheme of Arrangement for the de-merger provided for the appointment of Mr Sheth as the MD of GOL, with the same remuneration and on the same terms and conditions as per his appointment as MD of GE Shipping.

The Scheme of Arrangement clearly specified that the appointment applied only for the residual period at the end of which he would cease to be MD of GOL, the de-merged company. Hence, his tenure as MD of GOL technically and legally ends on March 31, 2007.

Further, the resolution No 11, approved by the shareholders of GOL at its first AGM on December 19, 2006, ratified the appointment of Mr Sheth as the MD of the company from October 16, 2006 (the effective date) up to March 31, 2007.

The equity shares of GOL were listed on December 21, 2006 and admitted to dealings on the BSE in the list of `B1' Group. In a formal response to a query by Business Line, a spokesperson of GE Shipping said that the concept of "a rift within the promoter family is a matter of sheer speculation".