Financial Daily from THE HINDU group of publications
Wednesday, Dec 22, 2004
Corporate - Corporate Disputes
Reliance Energy seeks to shift Anil's powers to RIL
Mumbai , Dec. 21
RELIANCE Energy Ltd (REL) proposes to withdraw certain powers and privileges of the Chairman and Managing Director, Mr Anil Ambani, and vest them with the promoter, Reliance Industries Ltd (RIL), by altering its Articles of Association.
The company informed stock exchanges today of a decision taken by its board on November 30 to get shareholders' approval through postal ballot to replace an article that gave Mr Anil Ambani the power to appoint, including himself, one-third of the board members and the Vice-Chairman.
The power company, however, did not explain why it remained silent about the development for over three weeks.
Articles of Association of a company are rules that govern its day-to-day functioning and can be amended with the approval of two-thirds of the members.
REL wants to amend Article 131 and its sub-clauses.
The move is being seen by many as another step in the ongoing struggle between the Ambani brothers, Mr Mukesh and Mr Anil, over ownership of group companies that have combined assets of nearly Rs 99,000 crore.
Even though technically Mr Anil Ambani has been only the nominee of the majority owners, RIL and associates, in the public eye he was seen as the owner and manager of the erstwhile BSES Ltd that supplies electricity to large parts of suburban Mumbai, New Delhi and Orissa.
Ironically, Mr Anil Ambani may have himself moved the resolution at the November 30 meeting, clipping his own wings as he was the only RIL nominee left on the board. Six directors had resigned from the board nearly a month ago.
The company is yet to clarify whether they have withdrawn their resignations or not.
One of the six, Mr Amitabh Jhunjhunwala, a group nominee and perceived to be close to Mr Anil Ambani, quit his job as chief treasurer of RIL yesterday.
According to persons close to the company, it is possible that he was asked to leave.
Mr Kanu Doshi, chartered accountant, said: "RIL has clearly cut the rights of REL Chairman Mr Anil Ambani."
Mr Doshi, who is also Dean of Finance at Mumbai-based Welingkar Institute of Management, said that the company was trying to take away powers vesting with an individual and vest it with the actual shareholder - in this case, Reliance Industries.
"But both these are publicly listed companies with huge market capitalisations. And that is what makes this a little curious," he added.
The REL board has appointed Mr Bhupendra Bangari, chartered accountant, to scrutinise the postal ballots in the November 30 board meeting.
Shareholders have been asked to return the completed postal ballot form before January 17.
Stories in this Section
The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription
Group Sites: The Hindu | Business Line | Sportstar | Frontline | The Hindu eBooks | The Hindu Images | Home |
Copyright © 2004, The
Hindu Business Line. Republication or redissemination of the contents of
this screen are expressly prohibited without the written consent of
The Hindu Business Line