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The Company Law Board (CLB) today declared the extraordinary general meeting (EGM) convened by IFCI for the appointment of an additional director on the board of Tourism Finance Corporation of India (TFCI) invalid.
The CLB Bench of Mr Justice D.R. Deshmukh, while declaring the EGM null and void, said: “The meeting was convened in violation of its earlier order.”
The direction of the board came over a petition filed by TFCI seeking to restrain Industrial Finance Corporation of India (IFCI) from holding the EGM. IFCI had convened the EGM for the appointment of an additional director on TFCI board.
Earlier, the CLB had directed that status quo is to be maintained on the board of TFCI till further orders.
Minority shareholders of TFCI had approached the CLB against IFCI, alleging that it was secretly acquiring the company’s shares to gain management control.
IFCI and TFCI are locked in a legal battle after the former proposed to appoint an additional director on TFCI board. IFCI had issued a notice for convening the EGM of TFCI shareholders which was stayed by CLB on the plea of the latter.
The shareholders maintain that as per market regulator SEBI’s Substantial Acquisition of Shares and Takeovers rules, if an investor acquires shares in a company that are more than 5 per cent, or more than 2 per cent if it already has 5 per cent, then it should inform the stock exchanges.
They said IFCI did not inform them about its proposed EGM for the appointment of an additional director on TFCI board.
However, senior counsel Mr Rajiv Nayar, appearing for IFCI, opposed the plea, saying that he would challenge its maintainability.
On January 13, the CLB had directed IFCI not to hold the EGM for appointing directors. It had also turned down IFCI’s plea that convening the EGM was not in violation of the CLB order passed on December 16, directing it to maintain status quo.
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