In a letter to the FIPB, the Pfizer Minority Shareholder Association has said that concurrence from institutional investors and minority shareholders, who jointly hold 60 per cent of the equity and voting rights of Pfizer India Ltd, must be taken before granting an approval to Pfizer Inc to set up a wholly-owned subsidiary.

The association has proposed that a no-objection certificate (NOC) from the minority shareholders should be obtained at an AGM held specifically for the purpose and that Pfizer Inc should not be entitled to cast its vote at such a meeting in view of the potential conflict of interest.

``We request FIPB, as the nodal agency directing FDI in India to send a clear signal that the Government of India is not interested in protecting only industrialistsbut also small shareholders like us,'' said the letter.

The association has questioned the need for Pfizer Inc to set up a wholly-owned subsidiary in the country when it has settled for smaller stakes in several countries such as China (67.1 per cent), Indonesia (80 per cent), Pakistan (76.3 per cent), Egypt (85 per cent) and Ghana (50 per cent) at sub 100 per cent holding, which also have a poor IPR regime than India.

In India, where foreign pharmaceutical companies have been allowed to increase their stake automatically to 74 per cent in the existing companies, Pfizer Inc also has the option to increase its stake upto 74 per cent by adopting preferential offer route. The letter mentions that the FIPB insists on a NOC from Indian partners who are in a joint venture with MNCs before allowing the MNC to undertake activities in related areas, through wholly-owned subsidiaries.

``The Indian shareholders in Pfizer India Ltd merit recognition at least similar to, if not better than joint venture partners. Inthis case, the joint venture is between Pfizer Inc and local shareholders like us. It is unfortunate that this venture is not seen as such in the absence of a single large co-promoter,'' the letter states.

The shareholders have said that MNCs like Pfizer should demonstrate better corporate accountability in India considering the fact that such a proposal which short-changes the minority shareholders would never have been allowed in other developed countries including the US.

The minority shareholders have asked for protection for themselves and said that the lack of protection could cause foreign direct investment (FDI) to have a negative repercussions on the Indian investors and through them, on the economy. The shareholders have said that since financial institutions like UTI, LIC and GIC have a large holding in Pfizer India Ltd, their holding will also suffer and consequently the small investor who has invested in units/bonds of these FIs will also suffer.

``The stock market too stands to witness adecline in qualities of listed companies and thus an erosion in investor confidence, if approvals for wholly owned subsidiaries continue to be granted in the existing manner,'' said the letter.