BoR employees threaten strike over merger with ICICI

Bank
Published on: May 28, 2010 - 01:15

More in: 
 Business
MUMBAI: Employees of troubled private sector lender, Bank of
Rajasthan, which is set to be taken over by banking biggie ICICI
Bank, on Thursday threatened to go on a token strike on June 4
and 5 to protest the merger.
Three major employee unions of BoR -- All India Bank of
Rajasthan Employees Federation, All India Bank of Rajasthan
Officers’ Association and Akhil Bhartiya Bank of Rajasthan
Karmchari Sangh -- have called the strike demanding the
immediate termination of the ICICI-BoR merger proposal.
“We have decided to strike work on June 4 and 5. If the
authorities do not heed to our demand, we will again go on a
three-day strike beginning 17th June. All branches of BoR and
over 4,000 employees will participate in the strike,” AIBOREF
president, Mr Dharmendra Rao told PTI over phone.
Employees fear that the merger would result in job losses as the
work culture of both banks are ‘extremely’ different. This would
also destroy the identity of one of the oldest private sector banks
in the country, they said.
Post merger, the ICICI Bank management will term various HR
policies and related settlement issues between BoR employees
and management as non-binding, negatively impacting
employees’ interests, Mr Rao said.
“Unions have number of internal settlements with its
management on various HR policies, which guarantees the job
security and protection from the management’s victimisation on
common employees...Which all shall be termed as ‘no-binding’
upon the management of ICICI Bank,” Mr Rao said.
The unions have also written to the Union Finance Minister, Mr
Pranab Mukherjee and Reserve Bank of India demanding their
intervention in the matter and have scheduled a meeting with
Regional Labour Commissioner to discuss the matter.
The move assumes significance as the shareholders of both
banks are set to meet on June 21 in an Extra Ordinary General
meeting to approve the merger proposal.
On May 23, ICICI Bank had announced the merger of Bank of
Rajasthan with it through share-swap in a non-cash deal that
values the BoR at about Rs 3,000 crore. The transaction would
be done by way of offering 25 shares of ICICI for every 118
shares of BoR.

ICICI Bk-BoR merger approved: Is it

legally tenable?
Published on Tue, Jun 22, 2010 at 21:39   |  Updated at Wed, Jun 23, 2010 at 10:19  |  Source : CNBC-TV18

Email

Print

Video

Share

Ads by Google
Multibagger Stock Picks
Get The Best Long Term Multibagger Stock Picks. Get Free Guide
Now! Equitymaster.com/Free_Stocks_Guide

The shareholders of Bank of Rajasthan have approved the bank's merger with ICICI

Banktoday. This comes after a series of bizarre events yesterday, where the extraordinary
general meeting that was called to approve the merger was first cancelled after a Kolkata
civil court restrained the management from holding the EGM. This was based on a
complaint filed by a shareholder who was against the merger. The bank then went ahead and informed
the exchanges that the EGM has been cancelled following a court order.
However, some shareholders, including the former promoter PK Tayal went ahead and held the meeting
chaired by a shareholder named DV Lakhani. And this merger resolution was put to vote.
RELATED NEWS
BoR shareholders approve merger with ICICI Bank
Uncertainty persists over Bank of Rajasthan's EGM outcome
ICICI, BoR merger: Bks hold EGMs, to declare votes tomorrow

ALSO READ
See latest News about Bk Of Rajasthan
See previous management interviews
See what other Experts & Brokerages are saying about Bk Of
Rajasthan

In the meantime, ICICI Bank approached the Calcutta High Court and got a stay against the lower court
order. Today the results of voting were declared and that approved the merger with ICICI Bank.
Speaking to the press, G Padmanabhan, MD & CEO, Bank of Rajasthan said, "We have only flagged
certain issues to our solicitors so that they can come back and tell us how to take the process forward.
We have asked for a legal view and we are awaiting that. The management really wants to know whether
whatever has been done is okay or not because the management has been endeavouring to implement
the majority decision of the board, only yesterday in the EGM because of the court order we went slightly
out of the loop so we are only trying to ensure that the process is taken forward legally and appropriately."
In an interview with CNBC-TV18, Akhil Hirani, Managing Partner, Majumdar & Co gave his perspective on
the legal tangle.
Below is a verbatim transcript. Also watch the accompanying video.
Q: The question is really about the process. Is this legally tenable?
A: This is a very curious case that has happened. I don’t think we have had seen something
similar happened before. Obviously in the first instance the Bank of Rajasthan took all the
necessary steps and did the process as per the Companies Act and fixed up a date for the
meeting and tried to hold this meeting.
In the meantime before the meeting could be held, a stay order was passed by the Calcutta
city civil court. Effectively the way we interpret this and the way I would look at it is that the stay order
would operate on the company because effectively the management and the Board of the company and
Chairman who is a member of the Board are the managers of the company. But a stay order directing the
management not to hold the meeting would effectively mean that the company should not hold the
meeting. So that’s the first point.
So in terms of the management then being made aware of this order and then deciding that well there is a
stay now and so we really can’t hold this meeting and therefore not holding the meeting, I think they took
the right step in doing that.
Of course you had all the shareholders who had gathered here and they decided that they could appoint
their own Chairman and continue with the meeting. There is no real process for something like this. What
the Companies Act provides is that 10% of the shareholders of a company could requisition a meeting
and make a request to the Board of the company to hold a meeting, and then the Board would be
mandated to hold such a meeting within a period of three weeks of such a requisition again by following
all the procedures.
Although you may have had the 10% who could have requisitioned the meeting but the onus eventually
was on the Board to then to take it forward. So if you look at it from a very technical perspective, whether
that shareholders meeting is a validly held meeting or not is very questionable. From a company law point
of view it could easily be a 50-50 case. Maybe that meeting was not valid in its own right.
So I think the management did the right thing because they were given a stay order and they said, fine we
can’t hold this until we do something about it. So that’s how we would look at that first phase.
Now what you have is the Calcutta High Court reversing that lower court order and saying that we vacate
the stay. But I don’t believe that such a vacation of this stay would be retrospective. So again if you look
back in point of time on the day of the meeting there was a stay which prevented the management and
thereby the company from going ahead with the meeting.
So the way we would look at it and the way one would go if you look at the process was that, now there is
no stay and now it is again open for the Bank of Rajasthan to have another meeting and to actually just
go ahead with the process in the two weeks or so if it can have a shorter notice and so on under its article
and reconvene the meeting which will put to rest the entire controversy because otherwise without any
real precedent and with different views on whether the court's order is retrospective or not is just going to
be nebulous and grey and again still subject to challenges, some other activist shareholder wants to
challenge that and go to the Supreme Court which will again thwart and delay the entire process. So
these are the issues as we look at them based on the facts that have been presented.
12
Next page »