New Delhi: Bharti Telecom Ltd, the parent company of Bharti Airtel, informed National Company Law Appellate Tribunal that it has complied with all applicable laws for capital reduction, and the value of shares offered to its minority shareholders under the process was fair, as it had been arrived at by following a standard method.
Capital reduction refers to a company buying its shares back from the shareholders, and it reduces the company's share capital.
Further, Bharti Telecom's counsel said, "99.90% of total shareholders had approved the capital reduction scheme," which upholds the principles of corporate democracy.
The minority shareholders have questioned the legality of the capital reduction process, claiming the valuation process is unfair.
They also doubted the valuer's independence as it was a subsidiary of the internal auditor of Bharti Telecom.
Refuting minority shareholders' argument that the 25% discount used to calculate the share value was illegal, Bharti Telecom's counsel said, " It's a standard practice for calculating the value of shares of unlisted companies and also accepted under the Indian Accounting Standards."
The share value was calculated with a 25% discount to adjust for the lack of marketability of shares, and since these were the shares of an unlisted company, their value can't be linked to the market. Further, the share value of ₹196.80 per share was calculated by independent valuers comparing different methods.
The counsel also argued that the largest minority shareholder who has approached the NCLAT had voted in favour of the capital reduction scheme.
The minority shareholders represent 1.09% of the share capital of Bharti Telecom, while the remaining shareholding is split between Bharti Group (50.01%) and SingTel Group (48.90%).
NCLT, Chandigarh approved the capital reduction scheme in October 2019.
Capital reduction refers to a company buying its shares back from the shareholders, and it reduces the company's share capital.
Further, Bharti Telecom's counsel said, "99.90% of total shareholders had approved the capital reduction scheme," which upholds the principles of corporate democracy.
The minority shareholders have questioned the legality of the capital reduction process, claiming the valuation process is unfair.
They also doubted the valuer's independence as it was a subsidiary of the internal auditor of Bharti Telecom.
Refuting minority shareholders' argument that the 25% discount used to calculate the share value was illegal, Bharti Telecom's counsel said, " It's a standard practice for calculating the value of shares of unlisted companies and also accepted under the Indian Accounting Standards."
The share value was calculated with a 25% discount to adjust for the lack of marketability of shares, and since these were the shares of an unlisted company, their value can't be linked to the market. Further, the share value of ₹196.80 per share was calculated by independent valuers comparing different methods.
The counsel also argued that the largest minority shareholder who has approached the NCLAT had voted in favour of the capital reduction scheme.
The minority shareholders represent 1.09% of the share capital of Bharti Telecom, while the remaining shareholding is split between Bharti Group (50.01%) and SingTel Group (48.90%).
NCLT, Chandigarh approved the capital reduction scheme in October 2019.
