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CLB
stays Federal Bank AGM resolutions
Our
Banking Bureau
29 September 2004
 Mumbai:
The Company Law Board (CLB) has put a stay against all
the resolutions that were put to vote at the AGM on Monday.
Federal Bank has been given time up to October 7 to file
the reply, and up to October 15 to file a rejoinder, if
any. The hearing will be held on October 18.
An
ICICI Bank spokesperson said that the CLB, Chennai office
issued a stay order on Tuesday evening against these resolutions.
The
stay order was issued on the grounds that ICICI Bank was
not allowed to exercise its full voting rights at the
AGM, despite producing a CLB letter permitting it to do
so.
The
chairman of Federal Bank, K.P. Padmakumar, who presided
over the AGM, had "overruled" the CLB letter,
the spokesperson said. Of about 44 lakh shares held by
ICICI Bank, only 26 lakh shares (11.7 per cent) were allowed
for voting.
The
chairman held that the erstwhile ICICI had been given
permission originally to exercise voting rights only for
26 lakh shares, and not the remaining shares that it had
acquired through rights issue.
The
chairman had also reportedly asserted that under Reserve
Bank of India rules, ICICI Bank was not eligible for the
full voting rights. In all, seven resolutions were put
to vote.
Resolutions seeking appointment of ICICI Bank-supported
directors and splitting of the chairman's post were defeated.
Federal
Bank is understood to be seeking legal opinion to vacate
the stay. Top Federal Bank officials said that they have
to study the CLB order to decide on the legal course.
However, sources said that the bank may approach the court
for vacating the stay.
RBI
sources said that the central bank may not be able to
intervene in the issue at the moment, as the CLB has intervened.
The
RBI can enter the picture only when the bank's board seeks
its approval on appointment of new directors.
Incidentally,
ICICI Bank had sought three years' time from the  RBI
to bring down its stake in Federal Bank. Under the RBI's
proposed regulations, ICICI Bank cannot hold more than
five per cent stake in Federal Bank.
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