The integration of United Spirits Ltd (USL) with its new owner Diageo–United Spirits received a major setback with the minority shareholders defeating a majority of the special resolutions at the extraordinary general meeting here on November 28.
A total of nine resolutions connected with entities related to USL Chairman Vijay Mallya were defeated. Only three other resolutions were given the nod by the shareholders.
A USL spokesperson said the company will look into the reasons for the shareholders taking exception to some of the resolutions. The company will take a decision on holding another meeting soon.
In a filing to the exchanges, USL said a key resolution regarding approval of a loan agreement between USL and UB Holdings has not been approved by the shareholders. Another resolution regarding sale of immovable properties to USL by UB Holdings also did not find favour with the shareholders.
The filing also pointed out that according to the regulation, the promoters were prohibited from voting on the resolutions. These included, Relay BV, which owns 54.78 per cent of the share capital of the company, United Breweries Holdings, Kingfisher Finvest India, and others who hold 4.09 per cent.
However, five of the promoters of the company — UB Holdings, Kingfisher Finvest India, Devi Investments, Rossi and Associates and Vittal Investments — exercised their votes in favour of the resolutions at item no 2 (relating to approval of sales promotion agreement between USl and Diageo) and item no 11 (relating to approval of properties call agreement between USL and PE Data Centre Resources Ltd). The filing said the scrutiniser has invalidated the votes by these entities. It also said the company will investigate the validity of the votes exercised by these entities.
The resolutions that were rejected by the shareholders are (for approval at least 75 per cent of votes is required from shareholders):
3. Loan agreement between the company and UBHL ( voted against: 44.12 per cent).
5. Agreement between the company and UBHL to sell to the company certain immovable properties (27.12 per cent).
6. Agreement with Kingfisher Fiinvest India. (77.17 per cent).
7. Advertising agreement with Watson Ltd. (58.78 per cent).
8. Sponsorship agreement between the company and United Racing & Bloodstock Breeders. (58.25 per cent).
9. Sponsorship between the company and United Mohan Bagan Football team (32.69 per cent)
10. Aircraft services between the company and UB Air Pvt Ltd. (77.53 per cent)
11. Properties call agreement between the company and PE Data Centre Resources (75.52 per cent).
12. Contribution agreement between the company and Vittal Mallya Scientific Research Foundation. (47.48 per cent).
A total of only 127 public shareholders participated in the voting, suggesting that institutions had a major role to play in the defeat of the majority of the resolutions.
The resolutions that were passed are: (1) erosion of net worth of the company, (2) sales promotion agreement and (4) trademark licence agreement.