Mumbai, July 25: The Mumbai high court on Friday rejected the objections filed by a minority shareholder of Hindustan Ciba Geigy against the scheme of arrangement for the demerger of the speciality chemicals business into a separate company.

The minority shareholder, DV Lakhani, had objected to the scheme of arrangement and had at the extra-ordinary general meeting moved an amendment modifying the "proportion of shares offered in the new company" to 1:1. The orginal swap ratio put forth by the company was one equity share in the new company for every two shares held in Hindustan Ciba Geigy.

Lakhani said that though the amendment was seconded by another shareholder, the chairman brushed aside the request by merely saying that it was out of order. This, he claims, amounts to oppression of rights of minority shareholders. Given these circumstances he asked the high court to treat the shareholders meeting as null and void.

Hindustan Ciba submitted that the chairman had conducted the meeting in a proper manner and the resolution had been passed with the requisite majority of the shareholders present and voting. The company further said that the approved share ratio of 2:1 for the demerger was fair to all shareholders.

Lakhani had, among other grounds of appeal, pointed out that while hiving off of its chemicals business, Sandoz India had given its shareholders one share in the new company for every share held. Ciba, however, said that comparisons with other companies was unwarranted as the facts and circumstances were different in its case.

The counsel for Hindustan Ciba also sought the substitution of Clause 12 (b) of the scheme of arrangement and that Clause 12 (a) of the scheme be deleted. The substituted clause while maintaining the swap ratio at 2:1, says that the board of Hindustan Ciba and the new company shall in respect of "one fully paid equity share of face value of Rs 100 each held by him in Hindustan Ciba be entitled as of right to claim and receive from the new company an allotment of five fully paid equity shares of Rs 10 each credited as fully paid."

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