Financial Daily from THE HINDU group of publications
Wednesday, Jul 13, 2005
Centre may move CLB again for more directors on Morepen board
New Delhi , July 12
NOT satisfied with the Company Law Board (CLB) directive to appoint two Government directors on the board of Morepen Laboratories Ltd, the Centre is weighing with the option of approaching the board again for increasing the Government strength on the company's board.
According to official sources, to safeguard the interest of depositors, particularly small depositors, the Government is of the opinion that its strength on the Morepen board should be greater.
The CLB had recently allowed the Government to appoint its two nominees as directors on the Morepen board for a period of three years.
The directive was given on a petition of the Union Government seeking appointment of six Government directors.
While giving its nod for appointment of two directors, the CLB had observed that it would suffice to monitor and assist the company.
The CLB Bench had also said that the company's board, which consists of six directors, already has two nominees of financial institutions.
The Centre had sought appointment of six directors with the view of having majority on the company's board, it added.
On whether the company's existing board composition of six directors could prove to be a hindrance for Government's attempts, legal experts said that the board strength could always be extended.
The allegation against Morepen was that it had raised deposits of Rs 156.19 crore from the public to fund its long-term capital requirements, but failed to repay the matured deposits from October 2002 onwards.
After receiving a large number of complaints, the CLB framed a scheme for repayment of all the deposits. However, the company has not been adhering to the repayment scheme.
Morepen failed to redeem cumulative redeemable preference shares and also defaulted on redemption of non-convertible debentures. It had diverted over Rs 67 crore as investment in associate companies.
While the company had filed applications before the Himachal Pradesh High Court on rescheduling of payments to its creditors, the DRT had restrained it from utilising the $15.25 million raised through a GDR issue.
Instead of repaying the matured public deposits, the company passed a resolution to issue equity shares to depositors and "by this means the depositors' interest had been affected."
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