Fi Stamp Must For Rpg-Kec Merger

The department of company affairs (DCA) has asked the RPG group to take prior permission from financial institutions before proceeding with the merger of RPG Transmission with KEC International.

In an affidavit filed before the Mumbai High Court, DCA joint director B M Anand has stated that as per the scheme of amalgamation, 12,05,950 shares of the transferer company, RPG Transmission, are held by the transferee company and its subsidiary.

``It was contemplated therein that these shares should be held in trust. The petitioner company, in the course of examination of the scheme, has made a submission that the shares held by the transferee company will be cancelled by means of filing an affidavit of an amendment,'' says the affidavit

 

The DCA affidavit sought that a cancellation of these holdings may be allowed with the consent of the holders of these shares. The DCA affidavit further states: "It is seen that after the merger takes place the transferee company ie KEC International intends to change its name as RPG Transmissions Ltd, the name of the transferor company." In this regard the petitioner company may be directed to follow the procedure laid down under the provisions of section 21 of the Companies Act.

KEC International's counter-affidavit says, "The company will certainly obtain consent from all the concerned FIs, banks who are members\creditors of the petitioner company to the proposed scheme of amalgamation. The scheme is presently under consideration of the FIs''.

With reference to the DCA petition seeking the cancellation of shares, the affidavit states: ``The petitioner company has agreed that the gross holding of approximately 20,00,000 equity shares shall stand cancelled. The directors of the petitioner company are authorised to take such a decision and accordingly such a decision has been taken.'' In response to the DCA petition regarding the name change of the company, the company affidavit stated that "in view of the judgement of this Hon'ble Court in the case of Morarjee Mills, it is not necessary for the petitioner company to follow the procedure laid down under section 21 of the Companies Act for the change of its name, however, if the Hon'ble court may so deem fit and proper the petitioner company would abide by the decision of this Hon'ble court".

In a related development certain members of the Parliamentary delegation on corporate governance which was in the city last week has written to the G P Gupta, chairman IDBI and P J Nayak executive trustee and acting chairman UTI, seeking that the FIs insist on nominee directorship on the board of KEC so that nothing can be done without scrutiny on the FIs' part. They requested that the FIs examine the proposed merger arrangement carefully and refuse approval of the proposed merger if it is seen to go against the interests of the company and non-RPG shareholders.