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The international multiplex chain Cinepolis Group and founder members of its Indian arm are involved in a legal dispute over share allotment.
Stripped of their positions, Milan Saini (Managing Director) and Deepak Marda (Joint Managing Director) of Cinepolis India approached the civil court in Gurgaon, Haryana, wanting the promoter company to meet its commitments regarding equity allotment in the Indian arm. It also wants to restrain the promoter from effecting any change in management.
The court, in an interim order passed on Monday, restrained Alejandro Ramirez, Miguel Mier and other directors and shareholders in Cinepolis India from terminating the agreement of October 2007. It requires them to maintain the status quo on the Board’s structure.
Cinepolis India currently operates 53 screens in 10 locations around the country and is set to cross 100 operational screens in the next nine months. It is the only international multiplex chain operating in the country.
Milan Saini and Deepak Marda had set up Cinepolis India in 2007 in collaboration with Ramirez, CEO of the parent company (Cinepolis) and Mier, the COO.
Saini and Marda were seeking equity in Cinepolis India, citing commitments made in the 2007 agreement by the Mexico-based promoter company.
This was not acceptable to Ramirez, Mier and other shareholders of Cinepolis India.
Following the differences, Saini and Marda were removed from the Cinepolis board and stripped of their powers as directors at a recent extraordinary general meeting.
Saini and Marda then approached the Gurgaon civil court seeking implementation of the agreement that allowed them stake in the company. Marda and Saini have alleged that in 2007’s business arrangement, it had been agreed that in “consideration of the efforts put in by the said management team, in establishing the business in India, after five years from the start of the said company, the management team would be entitled to equity in the company based on the internal rate of return generated on the investment.”
Meanwhile, the newly appointed Managing Director of Cinepolis India, Javier Sotomayor, has said that the Cinepolis India had also filed separate suits seeking injunctions against Saini and Marda.
In an email reply to Business Line , Sotomayor said, “The Board of Directors of Cinepolis India divested Milan Saini and Deepak Marda inter alia of their powers to bind and represent Cinepolis India, in terms of the resolutions passed in their meeting on March 22, 2013.”
He added that subsequently, on April 8, 2013, an extraordinary general meeting of Cinepolis India was held and Saini and Marda were also removed from the Board and thus ceased to be directors of Cinepolis India. He also said that the necessary filing under the Companies Act have also been done
He said that Cinepolis will continue to pursue all legal remedies in order to return to normal business functions as promptly as possible.
Asked how the dispute is affecting Cinepolis’ business in India, he said that until the matter is resolved in the higher courts, there may be some confusion regarding the management responsibilities at Cinepolis India. While this will certainly have an adverse affect on business operations and growth prospects, “the preservation of our business and, most importantly, our valuable workforce is and should remain everyone’s priority.”
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