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Zenotech Laboratories has questioned the legal validity of the approval given by the Foreign Investment Promotion Board (FIPB) to the Japanese drug giant Daiichi Sankyo in acquiring 20 per cent of its shares in the Andhra Pradesh High Court.
The Hyderabad-based company contented that a foreign company can buy shares of an Indian company only if they obtain a no-objection resolution from the board of directors of the Indian company. In this case, the FIPB permitted Daiichi to acquire the shares without such a resolution, it pleaded.
The High Court has ordered urgent notices to be sent to the FIPB, the Ministry of Finance and Daiichi Sankyo and posted the next hearing of the writ filed by Zenotech for July 16.
It may be recalled that Daiichi Sankyo had acquired Ranbaxy, which held over 47 per cent equity in Zenotech in 2008. The Zenotech promoter still holds 25 per cent equity, though the management has changed.
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