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Rajasthan court rules in favor of SSTL in shareholding dispute

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VoicenData Bureau
New Update
Court order

Gurgaon: The Rajasthan high court has ruled in favor of Sistema Shyam TeleServices (SSTL), which provides its telecom services under brand MTS, in a case which sought appointment of representative of minority shareholder on the Board of Directors.

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With the dismissal of the application filed by the minority shareholders, the company can now freely move ahead for approvals to change its shareholding pattern and FIPB (Foreign Investment Promotion Board) approvals to bring in 100% FDI.         

“The minority shareholders had filed an application seeking compulsory listing of shares of SSTL in a fixed timeframe; exit from the company at a pre-determined high price and appointment of minority shareholder on the Board of Directors,” a statement said.

The Rajasthan court dismissed the application filed by the minority shareholders and ruled that “listing of SSTL was not a mandatory part of scheme of arrangement and  listing of SSTL’s shares on the stock exchanges within a specified time cannot be held to be the raison d’ ere of the scheme of arrangement sanctioned  by the High Court in 2006.”

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The court cited that share prices are not static in nature and reference to share prices of SSTL historically from time to time in different fact situations and contexts is of no avail.

The court also held that determination of exit price is a vexed issue of fact relating to substantive rights and cannot be addressed in a Rule 9 Company (Court) Rules, 1959 and falls beyond the jurisdiction of company court.

 Neera Sharma, Executive Director- Legal, SSTL said, “The favorable order passed by the Honorable High Court of Rajasthan vindicates SSTL’s stand, that the Company is committed towards working in the interest of all shareholders while maintaining the highest standards of corporate ethics and governance.”

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