CHENNAI: Shareholders of Lakshmi Vilas Bank (LVB) drew some consolation on Friday at the Madras high court. The HC refused to stay LVB’s merger with DSB Bank India (DBIL), but directed DBIL not to take any further actions prejudicial to LVB shareholders.
The court made it clear that the Centre and the RBI are free to proceed further with the merger. But it said, “Even if the authorities have the power to reduce the
share value during an amalgamation under Section 45 of the Banking Regulation Act, reducing it to zero prima facie cannot be done without very, very compelling reasons.”
A division bench of Justices Vineet Kothari and M S Ramesh also directed the DBIL to furnish an undertaking to compensate shareholders of LVB in case the court rules so at a later stage. DBIL has been directed to create a separate reserve fund in its books of account to the extent of the face value of shares of LVB and maintain the same subject to further orders.
The court passed the order on the plea moved by AUM Capital Market challenging the merger. The court rejected pleas for interim stay of the merger, saying, “No blanket interim order can be granted against the merger as the scheme has already come to operation.”
Source From : Times Of India