Small investors balk at Digital's delisting move

Even as Digital GlobalSoft announced that it has scheduled January 19-23 as the five-day period for reverse book-building process for buying out the listed shares, the minority shareholders are expressing a strong resentment on its de-listing from Indian stock exchanges.

Though the official result of shareholders' votes is yet to be made public, it was clear that the shareholders were unhappy with the de-listing procedure.

Hewlett-Packard, which holds around 51 per cent of Digital GlobalSoft through its wholly owned subsidiary, Compaq Computer Holdings, had recently announced its decision to de-list the company by offering to purchase the shares at an offer Rs 750 per share.

Despite strong opposition from minority investors in the extraordinary general meeting (EGM), Digital GlobalSoft has reiterated that it is focussed on de-listing so as to integrate its Indian operations with its global delivery platform.

While a majority of the shareholders were unhappy with the offer price of Rs 750 per share, which has been fixed by the company, many others questioned the very basis of de-listing.

"This is unjust and unfair. If the company had given a proper dividend, there would have been a good capital appreciation by now. The company has reserves to the extent of Rs 290 crore. If necessary, we should knock the doors of the court for justice," a shareholder said.

The EGM witnessed a stormy discussion on the format of the notice that was served to the shareholders.

While Digital GlobalSoft officials began by stating that they sought for a resolution to the book-building process, the notice, on the other hand, mentioned that resolution was sought for de-listing.

However, N V P Tendulkar, CFO and company secretary, Digital GlobalSoft, clarified that the Sebi guidelines called for such a format and means book-building with the end result being de-listing.

At present, Compaq Computer Holdings holds 1,66,92,180 fully-paid-up equity shares of the company, representing 50.58 per cent of the equity capital of Rs 30.09 crore.

While 24 per cent of the shares are held by financial institutions (FIs) and foreign institutional investors (FIIs), the public holds 13.35 per cent.

HP must own a minimum 70 per cent in order to de-list Digital GlobalSoft from public trading, as per the newly introduced de-listing procedure under the Sebi norms.