Companies Act in Indian spotlight

05/04/2007  17:28:39

Indias Companys Act of 1956 may shed some light on the ownership puzzle surrounding Hutchison Telecommunications (HTIL)

The law states that parent-subsidiary relationship set out in the companys country of origin is valid in India too.

If the Indian government uphold this, HTILs total stake in Huch-Essar could amount to 67 per cent, just as it has declared to foreign stock exchanges.

But HTIL partner Vodafone has admitted that Indian law prevents it from owning all of the 67 per cent in Hutchison Essar.

In February it had said it would attempt to do so in a controversial USD11.1 billion deal.

Now Vodafone has acknowledged Indias ceiling on foreign investment in an offshore companies of 74 per cent.

HTIL owns 52 per cent of Hutchison Essar. A further 15 per cent is held on its behalf by companies owned by two Indian nationals, over which it has call options.

The final settlement is currently being delayed by Indias foreign investment promotion board, which has held back approval.

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