Maruti Suzuki delays shareholders' vote on Gujarat plant

Delay in seeking shareholders' approval s not likely to affect construction work at the site

Maruti Suzuki has delayed its plans to seek shareholders' approval for the controversial construction of a plant in Gujarat, India, reports the Press Trust of India (PTI). The shareholders' vote is now expected to be held once new rules under proposed amendments to the country's Companies Act come into force. Maruti Suzuki chairman RC Bhargava said: "Now another new factor, which is the proposed amendment to the Companies (Amendment) Bill, has come up. So, it would not make sense to go for the vote until we know what that bill is and what the future is." While the Indian cabinet has cleared several proposed changes to the bill, parliament has yet to issue its approval of the modified draft law. Included is a proposal that is likely to make it easier for companies to obtain shareholders' approval for related-party transactions. Under the existing regulations, Maruti needs the plan for the plant to be approved by at least three-quarters of its public shareholders through a special resolution. If the changes to the bill are cleared by parliament, shareholders' approval may be obtained through an ordinary resolution requiring a simple majority of over 50%. Significance: Despite the delay in seeking shareholders' approval, the executive added it is not likely to affect construction work at the site The automaker earlier planned to seek shareholders' approval over the controversial plan in October which was then delayed to November (see India: 22 August 2014: Maruti Suzuki to seek minority shareholders' approval for Gujarat plant in October). In 2013, Maruti's proposal to transfer the Gujarat land parcel, intended for a production plant, to its parent Suzuki faced massive opposition from minority shareholders. Following the criticism, the automaker has made changes to the plan and now remains hopeful of obtaining shareholders' clearance for the project. As of September, shareholder Life Insurance Corporation of India (LIC), which opposes the plan, held a 6.8% stake in the automaker, while mutual funds owned a total 6.53% stake. Under the current regulations, the combined stakes of these shareholders are enough to block the proposal.