The Hindu Business Line : CLB reserves order on Zandu-Emami row

Mumbai, Aug. 20 The corporate battle for control over ayurvedic-products maker Zandu Pharmaceuticals inched closer to a directive from the Company Law Board (CLB), with all parties involved completing their arguments before the board on Wednesday.

The CLB has reserved its judgment and an order is expected before this week runs out.

Zandu had resorted to legal recourse against Emami Ltd after the latter purchased shares from the Vaidyas, who were Zandu’s co-promoters.

In May, Emami said it had bought 24 per cent in Zandu through a share purchase agreement with the Vaidyas, taking Emami’s total stake in Zandu up to 27.5 per cent.

The Zandu-Emami legal tussle returned to the CLB, after the Bombay High Court had earlier this month directed the Board to pass its order within 15 days. Consequently, Zandu’s Annual General Meeting (AGM), slated for August, was also postponed.

The Zandu’s counsel asked CLB for an interim injunction to prevent Emami from exercising its voting rights till CLB gave its final decision. The purchase of shares from the Vaidya family in two tranches, indicated that Emami had already decided to acquire more than 15 per cent, hence violating the SEBI Takeover Regulations (1997), he said.

Though the transaction was structured in two tranches (about 88,000-odd shares and one lakh-plus shares), they were not separate and were all purchased at the same price, Zandu’s counsel argued.

Zandu had challenged Emami’s acquisition of shares saying that it had violated the SEBI Act (1992), the SEBI Insider Trading Regulations (1992) and the Companies Act (1956).

Emami’s open offer for an additional 20 per cent of Zandu’s shares awaits SEBI clearance.

Voting rights sought

Emami’s counsel countered that they should be allowed to vote on the 14-odd per cent that it held in Zandu. On the other tranche of about 12 per cent, Emami had stated that it would not vote, counsel said, indicating that Emami cannot exercise any management control.

Emami’s lawyers said that Zandu had not shared its AGM agenda, significant since several members of Zandu’s promoter family, the Parikhs, were set to get on board.

Further, it alleged that Zandu had not transferred some shares to Emami which it had bought from the Vaidyas in physical forms.

Countering, among other things, insider trading allegations, the defence for Mr Dev Vaidya said that he was not on the board of Zandu and hence was not privy to price-sensitive information.

Related Stories:
Emami may not have it easy on Zandu Pharma
Emami’s Zandu acquisition

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