Adding another dimension to the legal battle over the impending extraordinary general meeting called by Dish TV’s largest shareholder YES Bank, the DTH operator said a local office of Uttar Pradesh Police has asked the company to ensure that YES Bank does not deal in or liquidate its Dish TV shares, pending an investigation by the police into some matter.
Investigating agencies, such as the police and CBI, can prevent people from selling or liquidating or transferring their assets — including shares — during the pendency of any investigation of financial wrongdoing.
Besides the owner of the shares, the investigating agency also informs the company about any such ban on liquidation, so that if the owner of the shares tries to sell the shares to someone else, the company can block it.
The move by UP Police comes at a time when YES Bank, which owns close to 26% of Dish TV’s shares, is trying to eject several of Dish TV’s directors on the charge that they are acting at the behest of “certain minority shareholders holding merely around 6%” of the company’s shares.
The family of Zee Group founder Subhash Chandra, which used to own close to half the total shares, now own only around 6% of the total shares. These promoters lost most of their shares in Dish TV when the banks with whom they had pledged these shares invoked the pledges due to the non-payment of their dues.
Dish TV did not clarify what kind of case is being investigated by Gautam Buddh Nagar police, but said the freeze of the sale of the shares was issued under Section 102 of Indian Cr. P.C.
The section empowers policemen to freeze property, including cash and gold, if they suspect that it was obtained through illegal means, such as robbery.
The direction by UP Police is unlikely to have much impact on the ongoing tussle between YES Bank and Dish TV as YES Bank is not known to be trying to sell its shareholding in the DTH provider.
On the contrary, YES Bank is likely trying to organize an extraordinary general meeting of shareholders of Dish TV to have most of the board replaced.
Under India’s company laws, any shareholder with shareholding of 10% or more can call and organize an extraordinary general meeting of shareholders.
According to Indian law, a company must call an EGM within 21 days if shareholders representing at least 10% of the shares in the company request for it.
If the company fails to do so, the meeting can be called directly by the shareholder or shareholders who jointly hold 10% of the shares.
In such a case, the expenses of the meeting will be deducted from the “fees or other remuneration” payable to the current directors of the company who were in default in calling the meeting.