HYDERABAD: The managing director of L&T Metro Rail Hyderabad Limited (L TMRHL) V B Gagdil has handed over a special Golden Share of the company to chief secretary Pankaj Dwivedi on Friday.
LTMRHL is a special purpose vehicle (SPV) company established by L&T to execute the Rs 14,132 crore Hyderabad Metro Rail project.
Golden Share is a nontransferable special equity share with a face value of Rs 10 but which gives powers to the government as if it held 26 percent shares in the SPV without investing that amount.
The golden share entitles the government to nominate one director on the board of L TMRHL who will have veto powers on important matters as per the concession agreement. Thus, having a golden share ensures that the government has a say in all major decisions taken by the private concessionaire company.
It also ensures that the government's rights are irrevocable and are not adversely affected in any manner. The board needs the government nominee director's approval before passing any resolution to alter any provisions of the 'memorandum' and 'articles of association' of the company, to purchase the company's own shares, to reduce the company's share capital, to commence any new line of business, to shift the registers and other returns from the place of registered office, to make intercorporate loans and investments in excess of 10 percent of the company's paidup share capital and to wind up the company.
As per the Indian Companies Act, only those shareholders who have more than 26 percent of the equity share capital have the right to block resolutions in board meetings and the government gets these powers through the Golden Share.
The Golden Share was received by the chief secretary in the presence of municipal administration principal secretary B Sam Bob and Hyderabad Metro Rail managing director NVS Reddy.