Minority investors of printing ink maker Micro Inks will soon approach the stock market regulator Securities and Exchange Board of India (Sebi) and the Ministry of Corporate Affairs (MCA), opposing the company’s move to consolidate 1,000 shares into one.
The investors feel shortchanged by the management's move and see it to be an indirect way to boot them out as shareholders.
“We are in the process of taking up the matter with Sebi and MCA. What the management is doing is unfair," said a shareholder.
“We will also request Sebi to introduce a lasting framework beyond the listing and delisting guidelines to ensure investor interests are protected even after delisting of a company,” he added.
Micro Ink's board has passed a resolution to consolidate shares of face value of Rs 10 each into those of face value of Rs 10,000 each. Post consolidation, one share of the Gujarat-based company, now part of the Germany-based Huber Group, will cost Rs 6.4 lakh, according to the delisting price of Rs 640 per share of Rs 10 each.
“The company is making good profits, that is why they are trying to boot us out,” the investor added. "The German promoters bought the company from the Bilakhia brothers with eyes and ears open, fully knowing the costs involved in managing a listed entity. Now they cannot drive out the minority on the pretext of high cost. The cost is meagre today, since the remittances and correspondence happens electronically.”
‘The cost involved in handling and serving the members is very high, more particularly when their holding is very small,’ is a rationale the company has cited for consolidation of shares.
Another investor Business Standard spoke to supported these views. “We are also planning to contact the German consulate in India to check whether these actions are legal in the parent's country. If it is not allowed there, they cannot do it here, too,” the shareholder added.
Micro Inks, which got delisted from the stock exchanges in April 2010, still has 442,177 shares with the public. These are held by investors who did not participate in the delisting offer and opted to continue as Micro Ink shareholders.
The company will be transferring fractional shares, those less than 1,000 and its multiples, into a trust. The trust will either sell these shares and transfer the money to the shareholders or, offer the shareholders more shares to consolidate their fractional shares into consolidated equity of face value Rs 10,000 each.
