After close to two months of intense corporate battle, engineering and construction major L&T on Thursday crossed the critical stake holding mark of 26 per cent in Mindtree, making it the single-largest shareholder in the Bengaluru-headquartered IT services firm.
Post reaching this threshold, L&T will not only be able to induct its nominee on Mindtree board, it will also be able to block future resolutions relating to capital structure, dividend and acquisition passed by latter's board. It will also have a say in appointment of whole-time directors on board apart from induction of managing director. Sources in the know said that the engineering major is likely to seek an extraordinary general meeting (EGM) in near future to for board representation.
According to bulk trade data available in NSE, L&T on Thursday purchased more than 0.88 million shares worth around Rs 87 crore through open market transactions. With this addition of 0.54 per cent stake, total holding of L&T in Mindtree touched 26.48 per cent.
“All kinds of special resolutions which require 75 per cent approval of shareholders can be blocked by the entity holding 26 per cent stake in any firm. In that sense, L&T has not only become a single largest shareholder in MIndtree, it will now be able to exert significant influence in decision making in the IT firm,” said an industry expert.
According to section 114 of Companies Act 2013, special resolutions require three fourth approval from shareholders and include corporate actions like alteration of Memorandum of Association, issuance of depository receipts, sweat equity shares & convertible debentures, reduction in share capital, buyback, appointment of managing director, whole-time director and reappointment of independent directors among others. Sources also said the decision of special dividend announced by Mindtree in its last board meeting may also require L&T’s approval now.
After making a hostile takeover bid- the first in Indian IT services space- in the night of March 18, L&T subsequently concluded the purchase of 20 per cent stake of Coffee Day founder- V G Siddhartha in the Bengaluru-headquartered IT services firm for about Rs 3,210 crore in the first week of May.