RPG sells MSO to Siti Cable and exits cable television

16th May 2005: Siti Cable, the Zee family promoted enterprise, has acquired the RPG Enterprises firm Indian Cable Net Co Ltd, Kolkata's leading multi-system operator for cable television, after edging out Sun network owned by the Maran brothers of Chennai. RPG Enterprises confirmed on Saturday that it had entered into an agreement with Siti Cable to transfer its entire interest in Indian Cable Net (ICN), formerly known as RPG Netcom, after brief negotiations.

Amalgamation of Employees’ Provident Fund Organisation (EPFO), Employees’ State Insurance Corporation (ESIC) under consideration

14th May 2005: The government is thinking of amalgamating EPFO and the ESIC, labour and employment minister, K Chandrasekhar Rao said in Lok Sabha on Friday. He said the government was also contemplating steps to further strengthen the enforcement of the EPF Act.

Admitting that there were a “lot of misgivings” on the issue of PF defaulters, he said efforts were being made for realisation of over Rs 541 crore from total dues of Rs 1,862 crore. Responding to a calling attention by CPI leader Gurudas Dasgupta, Mr. Rao said the government had drafted a Bill to regulate the employment and service conditions of the unorganised workforce and provide for their safety, social security, health and welfare.

A comprehensive legislation for unorganised workers would be prepared after consultations with states and consideration of recommendations made by the Arjun Sengupta Committee. The major provisions of the unorganised sector workers Bill include setting up of welfare fund with contributions from workers, employers, central and state governments. There is also provision of formulation of social security schemes like health and medical care, employment injury benefits, maternity benefits, group insurance, housing and old-age pension, he said.

Bank mergers need 66% joint board majority

13th May 2005: RBI allows dissenting shareholders to claim the value of shares held. The Reserve Bank of India (RBI) today said private sector banks wanting to merge must get the approval of two-thirds of the combined strength of their boards. The same norm will be applicable when a private sector bank is merging with a public sector bank. This is part of the guidelines released by the Indian central bank for voluntary merger of private sector banks. The guidelines for “voluntary merger” of private banks have also allowed dissenting shareholders to claim the value of shares held but the central bank will retain the right to determine the price of such shares.

            Promoters of banks engaged in a merger process are required to strictly comply with the insider trading regulations of the Securities and Exchange Board of India. Even unlisted banks are required to follow the guidelines “in spirit and to the extent applicable”. The boards have been made responsible for ensuring a fair and proper share swap ratio. The RBI has said the board of the acquirer should closely look at whether a due diligence exercise was undertaken in respect of the target bank and the nature of consideration to be paid to the shareholders of the amalgamated company.

            Bank boards also have to ensure that the swap ratio must not lead to increasing the stake of any individual, entity or group in the amalgamating banking company that violates the ownership norms laid down by the regulator. The boards also have to ensure that the composition of the board of the merged entity is in conformity with RBI guidelines. The RBI has also made it necessary for board members participating in meetings to consider a merger proposal to sign the deeds of covenants on corporate governance forwarded by the RBI in June 2002.

            The boards of banks need to approve a draft scheme of amalgamation before convening a meeting of shareholders for obtaining approval of two-thirds of shareholders in value present. Under the Banking Regulation Act, 1949, after approval of shareholders, a merger proposal has to be submitted to the RBI for sanction. RBI has said the board of the acquirer should particularly consider the values at which assets, liabilities and the reserves of the amalgamated company are proposed to be incorporated and whether such incorporation will result in a revaluation of assets upwards or credit being taken for unrealised gains. The boards are also required to assess the impact of the amalgamation on the profitability and the capital adequacy ratio of the amalgamating bank.

 

M&A plans

• Private Banks wanting to merge must get the approval of two-thirds of the combined strength of their boards
• RBI allows dissenting shareholders to claim the value of shares held
• Promoters of banks engaged in a merger are required to strictly comply with the insider trading regulations