HC stay TMB from giving voting rights to unacknowledged shares

The Madras High Court today stayed the Tamilnadu Mercantile Bank Ltd from permitting any voting rights based on the "unacknowledged" shares transferred in contravention to the Banking Regulation Act.
Justice N Kirubakaran passed the interim order admitting a petition filed by P S P K Maragatharajaapandian, a share holder.
The Judge said in view of the refusal to acknowledge the holding of shares by the 18 respondents including those based in Mauritius, the US, Cayman Islands and some companies based in Delhi, Bangalore and Chennai the TMB should not give effect to the transfer of shares.
In case the transfer has been registered, the transferee shall not be entitled for voting rights, the Judge said and ordered notice to RBI Deputy Governor, TMB and companies that held unacknowledged shares and posted the case for hearing to August 19.

The petitioner submitted that RBI had declined to acknowledge 93, 563 shares (about 33 per cent of the banks total share holdings), belonging to 18 investors, who were on the roll of the register of members of the banks.
The RBI Deputy Governor denied the acknowledgement on various grounds holding that the arrangement under which the shares were kept in escrow account was not clear and lacked transparency.
He said though he gave a representation in April, the TMB had not taken any action. The RBI also had not taken any action against the TMB, he said.
He said the TMB was planning to hold annual general body meeting and was preparing to permit these share holders to vote.