DELHI, Nov 2: The Foreign Investment Promotion Board (FIPB) has asked Britain's Imperial Chemical Industries (ICI Plc) to get a supporting resolution from the Asian Paints board before it could consider its application for acquiring a 9.1 per cent stake in the company.

"In terms of guidelines, if somebody wants to invest through acquiring of shares in the secondary market, it has to come through the board of the company," TR Prasad, the highest-ranking civil servant in the industry ministry said. Sources in the industry ministry said a communication had been sent to the company recently.

The communication reportedly says that the foreign company's application is incomplete according to the policy guidelines, and cannot be considered by FIPB unless accompanied by a board resolution. The issue was referred to a high-level committee of secretaries, which was asked to look into the guidelines governing foreign investment and take a decision on it, he said.

The decision of the committee of secretaries, consisting of senior civil servants from various ministries, has been conveyed in a letter to ICI, Prasad said. "The Secretariat of Industrial Approvals has sent the letter to the company," Prasad said. "We have not yet taken it up at FIPB," Prasad said, when asked whether FIPB had rejected ICI's application to acquire a 9.1 per cent stake in Asian Paints, the country's largest paint maker.ICI Plc had bought 9.1 percent of Asian Paints' shares from managing director Atul Choksey through the Kotak Mahindra Capital Co in August for Rs 128.9 crore and had obtained RBI's permission to bring in the money, despite protests from the other partners.

Official sources said the ICI proposal was examined carefully under relevant provisions of the manual of policy and procedures governing industrial approvals in tandem with guidelines for considerations of FDI proposals.

ICI spokesman SH Venkatramani, however, said, "We have not received any letter from the government as yet". Venkatramani said, "We have legal reasons to believe why board resolutions to support the proposal to buy Asian Paints' shares are not required. We won't be part of the management with 9.1 per cent stake, nor will we get a board membership". ICI in its application to FIPB had made it clear that there was no takeover bid in its acquisition of Asian Paints shares, he said.

"We have gone to FIPB on the basis of our understanding of the matter regarding guidelines of January 1997, earlier Supreme court rulings on acquiring shares, takeover code of SEBI and the amended Securities Contract Regulation Act", he added. The company, which has sought legal opinion of leading lawyers, is not shelving any of its proposed investment plans because of the current imbroglio, Venkatramani said. Asian Paints has a 33 per cent share of the domestic paints market. ICI India Ltd, a subsidiary of ICI Plc, has a nine per cent share, according to analysts' estimates.