The tribunal, which heard the case on Monday, stated that FRL cannot hold shareholder meetings, even temporary ones, till it pronounces a detailed verdict.
The National Company Law Tribunal’s (NCLT) Mumbai bench on Monday stayed an extraordinary general meeting (EGM) convened by Future Retail (FRL) to approve its merger with Reliance Industries (RIL). The tribunal, which heard the case on Monday, stated that FRL cannot hold shareholder meetings, even temporary ones, till it pronounces a detailed verdict.
Earlier, FRL had informed the market regulator that it intended to start the e-voting, which would continue till November 9, and then declare the results the next day. The EGM was to be held following an NCLT directive, which asked FRL to take shareholders’ approval for the transaction with Reliance Retail, a subsidiary of RIL.
The stay comes after Future group filed an application before the tribunal stating that its paper work for the EGM was not ready. Further, it also sought to move the EGMs to November-end. On its part, American retail giant Amazon had also objected to the EGMs, pointing out that various tribunals — the Supreme Court, Singapore International Arbitration Centre (SIAC) and Bombay High Court — had refused to grant interim reliefs in the matter.
The legal issues cropped up after Amazon opposed the merger, citing a 2019 non-compete agreements between Amazon and Future Group that prevents FRL’s merger with certain companies, including RIL. Later in 2020, Amazon approached SIAC.
In August 2020, RIL sealed a deal to acquire the retail business of Future Group for Rs 24,713 crore, to fortify its retail play in India. On Sunday, FRL’s independent directors wrote to the Competition Commission of India asking it to revoke an approval given to Amazon-Future Coupons (FCPL) deal in November 2019. They alleged violation of foreign exchange rules, concealed facts, misrepresentation of facts before CCI among others.
“Amazon sought and obtained the approval of CCI on the basis that it was investing in the business of Future Coupon Pvt Ltd (FCPL) Future Coupons and not on the basis that it was acquiring strategic, material and special rights over FRL in preference to all the shareholders of FRL,” the letter said.
The independent directors also asked CCI to quash the approval given to Amazon to invest Rs 1,431 crore in FCPL. Amazon holds a 49% stake in Future Group company FCPL, which owns a 9.9% stake in Future Retail.