- July 17, 2018 / 4 min readHeineken is also believed to have begun discussions with Mallya on his role as chairman in UBL
World’s largest beer maker Heineken NV, the majority partner of United Breweries with Vijay Mallya, is understood to have sought legal opinion over its right to appoint a chairman at the Indian company, top officials close to the development said.
Heineken and some of its advisers believe that the shareholder agreement between Mallya and the beer giant has become null and void after India’s Enforcement Directorate attached his shares as part of its legal action against the liquor baron.
Heineken is also believed to have begun discussions with Mallya on his role as chairman in UBL. The original shareholder agreement between the two allowed Mallya to be chairman for life and a non-retiring director. This status can change only if he steps down on his own or nominates someone to replace him.
The board of UBL, India’s biggest beer company, had asked Mallya to either step down or appoint a nominee after the Securities and Exchange Board of India barred wilful defaulters from holding key board positions last year.
Mallya promised to do something by December 2017 while emphasising his opposition to an outside nominee.
The board officials are believed to be upset by the long delay and by Mallya’s opposition to a nominee. An acting chairman has been presiding over board meetings at UBL for nearly a year now and Heineken and UBL officials say that this situation cannot continue for long.
“This issue has not affected our business operations in any way and we are in fact recording good growth…we are hoping that it will be resolved soon,” he said.
Company officials are hoping the next annual general meeting would be the last to be chaired by an acting chairman after which the board will find a new chairman.
“The company is functioning well and operations are in good shape…but it is not good corporate governance to have an acting chairman for so long,” a company board member said seeking anonymity.
Mallya last chaired a UBL board meeting in November 2016 through a video conference from London. UBL has stopped sharing confidential information with Mallya and has said that he is no longer privy to any strategic developments.
Mallya fled to London in 2016 soon after lenders to his defunct airline Kingfisher Airlines declared him a wilful defaulter.
The banks want to recover an estimated Rs 9,000 crore from him in repayments of loans to Kingfisher Airline.
United Breweries in a regulatory filing in May 2018 said the Enforcement Directorate attached over 4.13 crore equity shares aggregating 15.63% stake held by eight promoter firms of the company and transferred to the agency.
With this transfer, the Enforcement Directorate (ED) now holds 4,27,04,758 equity shares (16.15% stake) in the company, said United Breweries.
The promoter companies, whose shares have been transferred to ED include United Breweries (Holdings) Ltd (1.95 crore shares aggregating to 7.39% stake) and McDowell Holdings Ltd (18.59 lakh shares, or 0.7%.
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