Syngenta challenges NCLAT’s valuation order in SC

Mumbai: The Supreme Court has stayed an order by the National Company Law Appellate Tribunal (NCLAT) that directed the parent of Syngenta India to pay a ‘fair price’ to some minority shareholders in the process of reducing the equity capital. Syngenta AG was founded in 2000 by the merger of the agrichemical businesses of Novartis and AstraZeneca. Shares of Syngenta India were delisted from the Indian bourses in 2007. However, some shareholders did not participate in the delisting offer.The entity was acquired by ChemChina in 2016. The Chinese promoters decided to reduce 3.59% shares of Syngenta India in 2017 held by the minority shareholders by paying Rs 2,445 per share as dividend as per the valuation done by PwC.Syngenta India will be represented by senior counsel Harish Salve in the Supreme Court, said a company spokesperson in response to an email query.“Syngenta India has followed the due legal process and obtained all necessary approvals for the payment of Rs 2,445 per share. The matter is sub-judice, we would therefore appreciate it if you may please wait for the Hon’ble Supreme Court to pass its judgment in this matter,” the spokesperson said.Syngenta's proposal was stuck at the National Company Law Tribunal (NCLT) for almost three years. On 27 October 2020, NCLT allowed the company to petition for the reduction of the share capital at the 2017 valuation. Public shareholders led by Devendra Prakash Kalra, Manish Mittal, Pradeep Kumar Jain and Vinay Khanna moved the NCLAT requesting the appellate tribunal to modify the NCLT order with the changes in the part of the valuation.“By the impugned order, the NCLT especially allowed squeezing out of the public shareholder in 2020 based on the 2017 valuations, thereby depriving the public shareholders the fruits of growth of the company between 2017 and 2020 when they were still the shareholders of the company,” said the petition filed before the NCLAT.Minority shareholders argued that the company’s net profit had jumped 75% from Rs 288 crore in FY17 to Rs 503 crore in FY19. 84155146“The company has also unjustly enriched itself to the extent of at least Rs 58 crore which it had set aside as dividend distribution tax,” said the petition filed before NCLAT. In the Union Budget of 2020, the government abolished the dividend distribution tax paid by the corporates. Now, the tax on dividends is paid by the investor.NCLAT on March 5 modified the NCLT order and directed Syngenta to re-value the shares by a registered independent valuer and pay the fair price arrived at by the valuer.Petitioners said the current value of their stake is at least three times the value of Rs 2,445 per share calculated in 2017.

from Economic Times https://ift.tt/3jI8fRX