The Company Law Board’s order which blocks the Essel group’s bid to take over the United News of India is a welcome development. It presents the news agency’s shareholders and employees with a chance to save the organization.
In September 2006, the UNI Board of Directors had allotted 10,208 shares of the company to Media West Private Limited, which belongs to the Essel group, promoted by Zee TV founder Subhash Chandra. Some nominees of MWPL were named members of the board.
UNI was launched by a group of newspapers in 1961 as a Section 25 (non-profit) company. As in the case of the older Press Trust of India news agency, the right to own shares was restricted to newspaper organizations. The deal the Board entered into with MWPL was in clear violation of the news agency’s mandate and traditions.
The UNI Employees Federation vigorously campaigned against the takeover bid. Later a group of shareholders moved the Company Law Board against the Board’s decision.
The petitioners included ABP Private Limited, Kolkata, publishers of the Anand Bazar Patrika group, Kasturi and Sons Limited, Chennai, publishers of The Hindu group, the Printers (Mysore) Limited, Bangalore, publishers of the Deccan Herald group, and Manipal Media network, of Manipal, publishers of Udayavani group.
The Company Law Board, in an order passed on Monday, said the Board’s decision to allot shares to MWPL was illegal. MWPL, not being owner of a newspaper published inin India, was not eligible or competent to acquire shares in the company. It declared that MWPL had ceased to be a shareholder and its nominees would cease to be members of the Board with immediate effect.
The CLB decision has saved the news agency from a rank outsider who attempted to seize control of it with apparently dubious motives, taking advantage of its financial problems.. There is now a chance to put it back on the path of healthy growth in tune with the traditions of the journalistic profession and the news agency itself.
As the CLB has pointed out, it is the responsibility of the UNI Board, more particularly the petitioners, to find ways and means to mobilize funds either by way of subscribing to the shares, if offered or by way of long-term loans, or in any other manner. There is the rub. If the petitioners, three of whom have been shareholders of the company from the very outset, had taken adequate interest in the working of the news agency, it might never have come to the sorry pass of being stalked by predators.
For a detailed report on the Company Law Board decision, please see The Hindu of January 23