Business Daily from THE HINDU group of publications
Tuesday, Aug 25, 2009
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Business Daily from THE HINDU group of publications Tuesday, Aug 25, 2009 ePaper | Mobile/PDA Version | Audio | Blogs |
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Regulatory Bodies & Rulings Info-Tech - Telecommunications
Thomas K. Thomas New Delhi, Aug. 24 The Department of Telecom has decided to seek the views of the Ministry of Corporate Affairs on whether the Government can stop Tata Communications Ltd (formerly, Videsh Sanchar Nigam Ltd) from increasing the authorised share capital as it may dilute the Government’s stake in the company. The Government owns 26.12 per cent in Tata Communications and it does not want to subscribe to any new offer from the company. TCL plans to increase its authorised share capital from Rs 300 crore divided in 30 crore equity shares of Rs 10 each to Rs 2,000 crore divided into 100 crore equity shares of Rs 10 each and 100 crores preferential shares of Rs 10 each. TCL objectiveThe main purpose of the TCL move is to generate funds using an appropriate mix of debt, equity and preference share. However, the Government is concerned that if it does not subscribe to such additional shares, its existing equity holding could get diluted. OptionsSenior DoT officials said that one of the options to resolve the issue could be to ask TCL to protect the Government’s rights under the company law as a 26 per cent stake-holder in the form of a written agreement. Similar views were expressed by the DoT at the time of TCL’s proposal regarding right issue which is yet to materialise. The DoT has observed that if the TCL board had decided on the rights issue as part of its corporate strategy, it would be unwise to prevent it unless the shareholders’ agreement disallowed it. The DoT has also sought the views of the Ministry of Law on whether it can ask TCL to give a written undertaking on protecting Government’s rights. Bid for WiMax?TCL has been keen to raise funds since the beginning of this year in a bid to finance its expansion plans and for possibly bidding for WiMax spectrum to be auctioned later this year. However, issues related to shareholder agreement had been coming in the way of the company. According to the Tatas’ proposal to the Government, the shareholders’ agreement (SHA) will not be adversely affected as long as the equity stake of the Government is 10 per cent or more. According to the SHA, if the Government’s share holding falls below the 10 per cent but is not nil, it has the right to have one nominee director on the TCL board. DoT seeks details of Tata Comm’s expansion plans Tata Comm seeks Govt nod to raise funds More Stories on : Regulatory Bodies & Rulings | Telecommunications | Tata Communications Ltd
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