The old section 22A of the Act, which allowed companies to do so, was dropped some three years ago, but managements can challenge the transfers at the Company Law Board (CLB). The Asian Paints board, which must obviously have considered these points before deciding to reject KMCC's transfer application, has adduced one main reason for its action: KMCC is not the real owner of the shares, and could in fact be a benamdar for ICI plc, which failed to get FIPB clearance for the transfers earlier.

Prima facie this argument does appear to hold some water. It is not clear why ICI plc, which authorised the sale of half the shares it acquired from Atul Choksey to UTI some time back, should now want Kotak to hold the balance 4.6 per cent unless it has a back-to-back understanding on their repurchase.

On the other hand, if Kotak really wants to buy these shares on its own account, it will have to explain to its own shareholders why it should be freezing as much of Rs 50-Rs 60 crore of cash in an asset that yields practically no return. Even if it did want to hold the shares for its own reasons, it is inexplicable why it had to buy them from ICI. It could quite easily have bought shares in the demat mode, where no management can block transfers. Quite clearly, KMCC has quite some explaining to do.

Asian Paints will have its own share of explaining to do when the matter ultimately ends up at the CLB, but there are good reasons why the matter should not be dealt with at the level of the CLB. For one, Asian Paints is a private sector navaratna and a champion Indian brand; it is worth helping the management keep the company Indian. Allowing a successful Indian company to be eaten up by global giants with lots of cash and nothing else (like Thums Up, Kwality's, etc) is like allowing India Inc to die stillborn.