The Rajasthan High Court has dismissed an appeal by minority stakeholders of Sistema Shyam TeleServices Limited (SSTL), thereby allowing the operator to seek Foreign Investment Promotion Board?s (FIPB) approval to seek additional foreign direct investment (FDI) to ensure 100 per cent foreign ownership.
Minority shareholders including Jindal Securities and others, holding about 0.66 per cent stake had filed an application seeking compulsory listing of shares of SSTL in a set timeframe. They had also appealed for an exit from the company at a pre-determined price, and appointment of a representative of minority shareholders on the board of directors.
However, the high court has rejected their plea on the grounds that the listing of SSTL was not a mandatory part of the arrangement scheme that was sanctioned by the high court in 2006. Meanwhile, the court added that as stocks were dynamic in nature and therefore historical references to SSTL’s share price could not be taken into account to pre-determine the exit price.
At present, Russia-based Sistema JSFC owns 56.8 per cent and Russian government and other foreign entities hold 17.14 per cent stake in SSTL. The company had applied for 100 per cent FDI in May 2014, but their application was rejected by FIPB as the mechanism for bringing in additional foreign investment was unclear.
