The integration of United Spirits Ltd (USL) with its new owner Diageo suffered a major setback, with the minority shareholders defeating most of the special resolutions at the extraordinary general meeting here on Friday.
Significantly, by a postal ballot, the shareholders rejected the agreement for manufacture and distribution of Diageo brands in India by USL. A total of nine resolutions connected with entities related to USL Chairman Vijay Mallya were defeated. Only three resolutions got the shareholders’ nod. A USL spokesperson said that the company will look into the reasons for the shareholders taking exception to some of the resolutions. The company will take a decision on holding another meeting soon.
Only 127 public shareholders participated in the voting, which suggests that institutions had a major role to play in defeating the majority of the resolutions.
In a filing to the exchanges, USL said the key resolution regarding approval of loan agreement between USL and UB Holdings has not been approved by the shareholders.
Another resolution regarding sale of immovable properties to USL by UB Holdings also did not find favour with the shareholders. The filing also pointed out that as per the regulation, the promoters were prohibited from voting on the resolutions. These included Relay BV which owns 54.78 per cent of the share capital of the company, United Breweries Holdings, Kingfisher Finvest India and others who hold 4.09 per cent. However, five of the promoters of the company, UB Holdings, Kingfisher Finvest India, Devi Investments, Rossi and Associates and Vittal Investments exercised their votes in favour of the resolutions at item no 2 and item no 11.
The filing said that the scrutiniser has invalidated the votes by these entities. It also said that the company will investigate the validity of the votes exercised by these entities.