INDIA – World’s largest beer maker Heineken NV, the majority partner of United Breweries with Vijay Mallya, has sought legal opinion over its right to appoint a chairman at the Indian company, according to top officials close to the development.
ETRetail reported that Heineken and some of its advisers believe that the shareholder agreement between Mallya and the beer giant has become null and void after India’s Enforcement Directorate attached his shares as part of its legal action against the liquor baron.
The company is also believed to have begun discussions with Mallya on his role as chairman in United Breweries.
The original shareholder agreement between the two allowed Mallya to be chairman for life and a non-retiring director.
However, this status can change only if he steps down on his own or nominates someone to replace him.
The board of UBL, India’s biggest beer company, had asked Mallya to either step down or appoint a nominee after the Securities and Exchange Board of India barred wilful defaulters from holding key board positions last year.
According to ETRetail, Mallya promised to do something by December 2017 while emphasising his opposition to an outside nominee.
The board officials are believed to be upset by the long delay and by Mallya’s opposition to a nominee.
An acting chairman has been presiding over board meetings at UBL for nearly a year now and Heineken and UBL officials say that this situation cannot continue for long.
“This issue has not affected our business operations in any way and we are in fact recording good growth…we are hoping that it will be resolved soon,” he said.
Company officials are hoping the next annual general meeting would be the last to be chaired by an acting chairman after which the board will find a new chairman.
“The company is functioning well and operations are in good shape…but it is not good corporate governance to have an acting chairman for so long,” a company board member said seeking anonymity.
Mallya last chaired a UBL board meeting in November 2016 through a video conference from London.
UBL has stopped sharing confidential information with Mallya and has said that he is no longer privy to any strategic developments.
