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Mukesh to recover Rs 50 cr investment post annulment
BS Corporate Bureau in Mumbai | December 25, 2004 18:07 IST
Reliance Industries chairman and managing director Mukesh Ambani will recover his investment of Rs 50 crore (Rs 500 million) from Reliance Communication Infrastructure Ltd, the holding company of Reliance Infocomm, after the annulment of the sweat equity shares.
A Reliance Industries spokesperson explained on Friday that the deal giving sweat equity shares to Mukesh had been annulled, and not the shares. By virtue of the cancellation of the deal, Mukesh's holding of 12 per cent stake in Reliance Infocomm goes back to RCIL.
According to an established corporate lawyer, the company law permits both annulment of the deal as well as shares.
"Mukesh Ambani's 12 per cent can either be transferred to RCIL or extinguished, depending upon the wishes of the persons concerned. Both are legally permissible, " he said.
He explained that if the shares had been vested upon an employee through an employee stock option plan, and the employee chose not to take them, then the shares could have been cancelled.
Since Mukesh Ambani had exercised the option, once he gives it up, this portion (12 per cent) can be extinguished and to that extent Infocomm's equity could be reduced. Alternately, it can be transferred to RCIL, he said.
The RIL spokesperson said RCIL will shortly inform Reliance Infocomm about the cancellation of the deal."Mukesh Ambani sought to cancel the deal between him and RCIL. RCIL has already informed the Reliance Industries board and it will also inform the Infocomm board separately," he said.