Citing worsening financial situation of newswire agency United News of India (UNI) and the recent resignations of four directors from its board, Subhash Chandra’s Essel Group company Media Vest yesterday petitioned the Delhi High Court, pleading that their directors be given voting rights.
Of the mandatory 15 directors on the UNI board, only six directors remain now. Of the six, four are from Media Vest. However, these four have no voting rights as per an earlier direction of the Delhi High Court. Therefore, while effectively there are only two directors with voting rights, the UNI laws state that at least three directors with voting rights should be functioning on the news agency’s board to take decisions.
“We have sought relief from the Delhi High Court that we should be allowed to vote in all future board meetings. We have also suggested that the court may appoint five independent directors in addition to the six, so that we are not in a majority. We want UNI to turn around,” A Mohan, Essel Group’s executive vice-president and head of corporate affairs, told Business Standard.
The Essel Group had made a bid to acquire 51 per cent in UNI in 2006 by paying Rs 32 crore so as to turnaround the agency. Later, the matter faced several legal hurdles.
However, in January this year, the Company Law Board (CLB) had held the transfer of unsubscribed shares of UNI to Media Vest as ‘null and void’ on the grounds that the deal lacked transparency.
When contacted, UNI counsel A K Seth said, “The real issue before the court is alleged illegal transfer of shares to Media Vest. All other matters are secondary, including demand for voting rights. UNI had called for its annual general meeting (AGM) on October 23 and the court was not informed. We are withdrawing the call for AGM.”
The final hearing in the matter is slated for November 25.
In January, the Delhi High Court, while staying a CLB order on the transfer of unsubscribed UNI shares to Media Vest, had permitted four Essel representatives as directors (without voting rights) on the UNI board.
Of the 10 directors who were there on the UNI board in January, four have since resigned. They are Naresh Mohan, Ravindra Kumar, Mahendra Mohan Gupta and Arindam Sengupta.
Currently, there are only six directors left on the UNI board – Subhash Chandra, Jawahar Goel, P C Lahiri and C S Vishwanathan (all from Media Vest) while the other two are P K Maheshwari and D D Purkayastha.
Making its plea before the Delhi High Court, the Essel Group has sought the voting rights for its directors because the worsening financial situation of UNI.
It said in the petition, “UNI has suffered a loss of Rs 9.03 crore for 2007-08 while the total accumulated losses of the company have already touched Rs 13.92 crore as on March 31, 2008...As per the projections circulated in the meeting dated May 12, 2008, the company is likely to suffer a loss of Rs 8.57 crore during 2008-09. This deficit or loss is further likely to increase as the Wage Boards constituted for recommending the pay hike for journalists etc have already recommended 30 per cent interim relief ...”
