The Himachal Pradesh High Court has upheld Super-Max founder Rakesh Malhotra’s decision to drop two directors and induct four others in a subsidiary, as it disposed of a petition filed by a unit of British private equity fund Actis.
The court has also paved the way for holding an extraordinary general meeting of the Super-Max subsidiary, Tigaksha Metallics Pvt Ltd (TMPL), that was stalled for two years.
Actis Consumer Grooming Products Ltd, a division of Actis that holds 40% in TMPL, argued that its prior consent was required for making the changes to the board. While the court rejected this, it said TMPL’s move to appoint an executive chairman and amend its articles of association required the minority shareholder’s written approval.
Super-Max on February 8, 2018 moved a requisition to convene an extraordinary general meeting to ratify appointment of the four new directors. It had also sought to appoint an executive chairman for TMPL and amend its articles of association.
In its petition challenging the removal and appointment of directors, Actis alleged that Malhotra acted in violation of the Companies Act, 2013 and articles of association and the subscription and shareholders deed dated November 4, 2010, between Actis and Super-Max/TMPL.
In its ruling last week, the court held that Malhotra was within his powers to remove the two directors, and that he was under no legal obligation to seek prior consent from Actis. It also upheld the appointment of four new directors by Malhotra.
When contacted, Malhotra’s counsel Nirvikar Singh said: “We will vigorously pursue all litigations against Actis Consumer Grooming Products pending before other forums in India and abroad.” The counsel for Actis Consumer Grooming Products refused to comment.
Because of the stand-off, the EOGM could be held for over two years. As a result, the company could not comply with certain Companies Act requirements. It was penalised by the Income Tax Department for not ratifying annual returns for over 15 months.
Source: Economic Times