The FIPB noted that the 15% minority shareholding in HEL was not owned or controlled by foreign entities, making the company fully compliant with FDI norms. This stake cannot be sold to a foreign entity. Of the 15%, 12.26% is held between the HEL managing director Asim Ghosh and Max group chairman, Analjit Singh, while the remaining is held by IDFC. The matter has now been placed before the finance ministry for final clearance.
FIPB also recommended a review of FDI across sectors to plug loopholes and define indirect shareholding more clearly and comprehensively.
We are fully satisfied with the compliance level... they (Vodafone) have to comply with Press Note 3 of 2007 to remain in the telecom sector, said Ajay Dua, secretary, department of industrial policy & promotion, after the meeting. (Minority shareholders) can only sell their stake to an Indian company after acquiring prior permission from the government, he added.
Since Hutchison Telecommunications International Ltd (HTIL), the erstwhile majority stakeholder in HEL, had provided bank guarantees for the stakes held by Ghosh and Singh, it was alleged that their stake should be construed as foreign. In that event, with Vodafones 52% stake and Essars 22% routed through Mauritius, the total FDI component in the company would have touched 89%, breaching the 74% cap for the sector.
15% minority shareholding in HEL not foreign-owned
The FIPB, which deferred a decision on the matter thrice, had sought a legal opinion from the law ministry, which had absolved the minority shareholders of any benami transaction, as was alleged.
The deal attracted international attention with British Prime Minister Tony Blair writing to Manmohan Singh to expedite clearance of the deal.