The Ramesh Vangal-led overseas investors in Tamilnad Mercantile Bank would not be entitled to voting rights, according to an interim injunction of the Madurai Bench of the Madras High Court.
The court, in its order dated July 29, 2013, said that since the Reserve Bank of India refused to acknowledge the holding of shares by the overseas investors, the banking company should be directed not to give effect to the transfer of shares.
And, in case the transfer has been registered, the transferee shall not be entitled to voting rights, according to Chapter II amendment of Section 12B (3).
This phase of the ownership imbroglio at the Tamilnad Mercantile Bank started many years ago with a group of foreign investors, led by Ramesh Vangal, Chairman of Katra Holdings Ltd, picking up a substantial stake in the closely-held Tuticorin-based bank.
The apex bank refused to acknowledge the transfer of 93,563 shares as it was not in compliance with the Banking Regulation Act.
Following this, P.S.P.K. Maragatharajaapandian, son of the founder and a shareholder of the bank, moved the Madras High Court seeking an injunction restraining the banking company from permitting any voting rights to the overseas shareholders.
The order will restrain FIIs, who are holding 30 per cent (93,563 shares) of the total 2,84,454 shares of the bank, from voting in any of the meetings of the TMB.
When contacted, K.B. Nagendra Murthy, Managing Director and CEO of Tamilnad Mercantile Bank, refused to comment on the development.