In a landmark decision, the Company Law Board (CLB) held Man Industries’ employees’ stocks ownership plan (ESOPs) illegal, in which the company had issued 2.66 million shares to its employees.
In an order dated May 30, the Mumbai bench of the CLB said the Compensation Committee meeting purportedly held on October 15, 2012 was illegal and that its decision to allot 2.66 million shares to ESOPs was “ineffective and invalid”, being in contravention of the undertaking tendered by the company before the bench.
However, the CLB clarified this order should not be treated as a permanent embargo on implementing the earlier decision of the company to allot and issue the shares to ESOPs and the company might implement its decision in accordance with law after the expiry of the period of appeal.
Ramesh Chandra Mansukhani, chairman, Man Group, said: “Since the appeal period is still on, it will not be appropriate for us to comment on the issues related to the CLB order on various aspects of it, including ESOPs. The company or any of the aggrieved party may prefer appeal.”
The Man Group is a leading manufacturer and exporter of large diameter carbon steel line pipes with an annual turnover of Rs 1,461 crore (Rs 14.61 billion) (FY 2012-13), a decline of 15 per cent from the previous year. The company’s net profit declined 12 per cent to Rs 62 crore (Rs 620 million).
The petition was filed by R C Mansukhani’s younger brother J C Mansukhani, vice-chairman and managing director of Man Industries.
The order further said in case J C Mansukhani offers to sell his respective shareholding, R C Mansukhani has to be bound to purchase it within 90 days of the receipt of the offer in writing at the price per share which is being quoted in National Stock Exchange/ BSE on the date of receipt of such offer.
In case, R C Mansukhani refuses to purchase J C Mansukhani’s shares and / or fails to purchase the shares within the stipulated period, the former shall be entitled to purchase the shareholding of the latter on the said value within three months in the same manner.
While J C Mansukhani holds 28 per cent stake in the company, his elder brother holds between 29-30 per cent.