Law ministry takes call, put option out of Hutch

NEW DELHI: Hutchison Telecom International Ltd cannot exercise the call and put option that it has on the Hutch Essar stakes held by Asim Ghosh, Analjit Singh and IDFC.

The Ministry of Law & Justice has told the Foreign Investment Promotion Board (FIPB) that if Global Service Pvt Ltd (GSPL), an indirect subsidiary of HTIL, does so it will transgress the 74% FDI limit.

Ghosh, Singh and IDFC had accorded the options to HTIL or its affiliates.
Under the terms, if the call option is invoked, Ghosh, Singh, IDFC are free to sell their shares without encumbrances.

On the other hand, if the put option is invoked, HTIL or its affiliates can buy the shares from them at a pre-determined rate.

The law ministry said in the event GSPL assigns its rights to any nominee, then the said entity shall also have to comply with the regulatory restrictions under Indian law.
The ministry’s 24-page document, submitted to the FIPB on Monday, also said Ghosh, Singh and IDFC are the legal and beneficial owners of their indirect shareholding in Hutch Essar. Together they hold around 15% in the mobile phone operator.

Referring to this, the law ministry said the mere fact that a shareholder requires the prior consent of the other shareholders for a transfer of shares does not mean that the shares held by such shareholders are not owned by him.