Company’s letter # 1
MBI/CS/2004/
December 1, 2004
The Executive Director – Legal SEBI
Mittal Court, ‘B’ Wing 1st Floor, 224, Nariman Point,
MUMBAI – 400 021.
Sub.: Request for Interpretive Letter under the SEBI (Informal Guidance) Scheme, 2003
Dear Sir,
INTRODUCTION
Moser Baer India Limited is a Company duly incorporated under the provisions of the Companies Act, 1956. Our Company is listed on The National Stock Exchange of India Limited and The Stock Exchange, Mumbai.
FACTS
We have Independepent Directors on our Board as well as on various Committees thereof including the nominee directors of two equity investors. These nominee directors are also members in various Board Commitees of the Company. Recently, Clause 49 has been revised vide SEBI circular dated 29th October, 2004 and a new definition of “Independent Directors” has been introduced.
QUERY
Whether the nominee directors appointed on the Board of the Company, by the equity investors which are not covered in definition of “Institution” as defined under Clause 49 of the Listing Agreement, be considered as “Independent” under the revised Clause 49?
DETAILS OF PAYMENT OF PRESCRIBED FEE
The prescribed fee of Rs.25,000/- vide our Demand Draft No. 363202 dated 30th November, 2004 drawn on HDFC Bank payable at Mumbai in favour of “Securities and Exchange Board of India” is enclosed.
We would appreciate if a clarification could be provided to us at the earliest.
Thanking you,
Yours faithfully,
For MOSER BAER INDIA LIMITED
COMPANY SECRETARY
Encl.: As above
Company’s letter # 2
December 22, 2004
Shri Pradeep Ramakrishnan, Manager
Corporate Finance Department Division of Issues and Listing
Securities and Exchange Board of India Mittal Court, ‘B’ Wing
1st Floor, 224, Nariman Point, MUMBAI – 400 021.
Sub.: Request for Informal Guidance – Clause 49
Dear Sir,
Kindly refer to the correspondence resting with your letter number CFD/DIL/MISC/PR/2004 dated 17th December, 2004. As desired, please find enclosed the following documents: -
- Details of the constitution of the Board of Directors alongwith details of independent Directors of the Company – Annexure “A”
- Details of the equity investors & their stake in the Company – Annexure “B”
Kindly do the needful. Thanking you,
Yours faithfully,
For MOSER BAER INDIA LIMITED
COMPANY SECRETARY
Encl.: As above
Annexure “A”
DETAILS OF THE CONSTITUTION OF THE BOARD OF DIRECTORS ALONGWITH DETAILS OF INDEPENDENT DIRECTORS OF THE COMPANY
The Board of Directors of the Company comprises of nine Directors, six being non-executive and three being executive Directors. Details of the same are as follows: -
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Sl. No.
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Name of the Director
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Details
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1
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Mr. Deepak Puri
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Executive Director (Chairman and Managing Director)
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2
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Mrs. Nita Puri
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Executive Director (Director – Administration and HR)
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3
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Mr. Ratul Puri
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Executive Director
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4
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Mr. Harnam D. Wahi
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Non - Executive Independent Director
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5
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Mr. Prakash Karnik
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Non - Executive Independent Director
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6
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Mr. Arun Bharat Ram
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Non - Executive Independent Director
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7
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Mr. Bernard Gallus
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Non - Executive Independent Director
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8
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Mr. Rajesh Khanna
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Non - Executive Independent Director*
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9
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Mr. John Levack
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Non - Executive Independent Director**
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* Mr. Rajesh Khanna is a nominee Director of Warburg Pincus Singapore LLC.
** Mr. John Levack is a nominee Director of Electra Partners Mauritius Limited.
Thanking you, Yours faithfully,
For Moser Baer India Ltd.
Company Secretary
SEBI’s reply
Parag Basu
Deputy General Manager
Corporation Finance Department
Division of Issues and Listing-II
Phone: +91 22 2285 0451-56, (Extn: 410) 22871582
Fax: +91 22 2204 5633. Email: paragb@sebi.gov.in
CFD/DIL/MISC/IG/PB/PR/ /2005
February 3, 2005
Moser Baer India Ltd.
438, Okhla Industrial Estate
New Delhi – 110 020
Dear Sir
Sub: Request for Informal Guidance – Clause 49 of the Listing agreement
Please refer to your letters dated December 1, 2004 and December 22, 2004 requesting for informal guidance on the captioned subject.
You had represented that you are a company listed on BSE and NSE. You had further represented that you have independent directors on your Board and its Committees and that two of them are nominee directors of two equity investors.
You had requested for clarification for SEBI (Informal Guidance) Scheme, 2003 on whether such directors can be categorized as ‘independent’ under clause 49 of the Listing Agreement as revised vide SEBI circular dated October 29, 2004.
In this regard, our comments are as follows:
1. Clause 49 I A (iv) of the Listing agreement of the said circular states as under:
Nominee directors appointed by an institution which has invested in or lent to the company shall be deemed to be independent directors.
Explanation to the same sub-clause states as under:
“Institution’ for this purpose means a public financial institution as defined in Section 4A of the Companies Act, 1956 or a “corresponding new bank” as defined in section 2(d) of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 or the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 [both Acts].”
2. In this case, Rajesh Khanna and John Levack, nominee directors of Warburg Pincus Singapore LLC and Electra Partners Mauritius Ltd, the “equity investors”, cannot be considered as independent directors for the purpose of clause 49, since, the “equity investors”, which have nominated them do not fall under the scope of the definition of “Institution” given in clause 49 I A (iv) of the Listing agreement
3. This position is based on the representations and submissions made to the Division in your letters under reference. Different facts or conditions might require a different result. This letter expresses the Division’s position on applicability of clause 49 of the Listing agreement only in the instant case. It does not express decision of the Board on the questions presented. This guidance is based on the law existing as on February 3, 2005.
4. You may note that the above views are expressed only with respect to the clarification sought by you on the applicability of clause 49 of the Listing agreement and do not affect the applicability of any other law or requirements
Yours faithfully
Parag Basu