Date:09/12/2006 URL: http://www.thehindu.com/2006/12/09/stories/2006120905571200.htm

National

Company Law Board disallows changes in UNI shareholding

J. Venkatesan

Allotment of shares to Media Vest aprime facieviolation: Chairman

New Delhi: The Principal Bench of the Company Law Board (CLB) has directed that status quo be maintained with regard to shareholding of the share in the United News of India (UNI). The CLB also ordered that no board meeting of the news agency should be held without its permission.

Board Chairman S. Balasubramanian passed the order on December 5 on a company petition filed by ABP Private Ltd; Manipal Media Network; Kasturi and Sons Ltd. and the Printers (Mysore) Ltd.

The petition sought a declaration that a resolution, purportedly passed at a meeting of the UNI Board on September 2, 2006, increasing the paid up and subscribed capital of the company from Rs. 10,18,900 to Rs. 20,39,700 by allotment of 10,208 shares of Rs. 100 in favour of Media Vest Private Ltd. (respondent no. 4), was illegal, null and void and not binding on the petitioners and the company. An interim injunction against the transfer of shares was also sought.

Mr. Balasubramanian said: "Arguments on interim relief heard. It prima facie appears that allotment of shares to Media Vest is in violation of Article 4 and the co-option of four Directors immediately after the general meeting on the same day does not appear to be bona fide.

"In view of this, I direct that status quo with regard to shareholding of the share be maintained and that no Board meeting [of the UNI] should be held without leave of this Board [CLB]. I also direct maintenance of status quo with regard to fixed assets of the company. Respondents to file their replies to the petition by January 20, 2007 and rejoinder to be filed by February 10, 2007. The matter will be heard on March 7, 2007."

The petitioners contended that the purported allotment of shares in favour of Media Vest at the UNI board meeting was ultra vires of the Articles of Association of the company which provided "that no share or shares shall be allotted or transferred to any person other than the owner of any newspaper in India and the respondent no. 4 not being an owner of a newspaper published in India is not eligible or competent to acquire shares in the company."