In yet another example of shareholder activism, almost 90% of stakeholders, mainly institutions and the public, have rejected a proposal to delist Allcargo Logistics Ltd.
Promoters of Allcargo Logistics, including Shashi Kiran Shetty, Aarthi Shetty, Adarsh Hedge, Priya Hedge, and Shloka Shetty Trust (represented by Shashi Kiran Shetty as trustee), who together hold 70% stake in the company, were seeking voluntary delisting from National Stock Exchange (NSE), BSE and withdrawal of ‘permitted to trade’ status on the Metropolitan Stock Exchange of India Ltd (MSE). Public shareholders, including institutions, hold the balance 29.99% stake in Allcargo Logistics.
In a regulatory filing, the company says, “Pursuant to Regulation 44(3) of the Listing Regulations; the aforesaid resolution has been passed as a special resolution under section 114 of the Companies Act, 2013; however, in terms of Regulation 11(4) of the delisting regulations, we would like to inform you that the aforesaid resolution has not been passed by the public shareholders with the requisite majority. The requisite majority to pass the aforesaid resolution has not been obtained till the last date specified for remote e-voting on Friday 10 September 2021.”
The delisting proposal received 3.83 crore votes, out of which 44.66 lakh or 11.64% voted in favour, while 3.39 crore or 88.36% voted against it.
Last year in August, Shashi Kiran Shetty and Talentos Entertainment Pvt Ltd, the promoters and promoter group entity of Allcargo Logistics, announced their plan to buy all shares held by public shareholders and delist the company from stock exchanges.
Explaining the rationale for delisting Allcargo Logistics, the promoters have said, “...the proposed delisting will align the group’s capital and operational structures, streamline the process of servicing the group’s financing obligations and significantly improve a range of important credit metrics...delisting would enable the members of the promoter group to obtain full ownership of the company, which in turn will provide enhanced operational flexibility. As the company will no longer remain listed in India, there will be a reduction in dedicated management time to comply with the requirements associated with the continued listing of equity shares, which can be refocused on its business...”
“...the proposed delisting will result in a reduction of the ongoing substantial compliance costs which includes the costs associated with the listing of equity shares such as annual listing fee and fees payable to share transfer agents or such other expenses required to be incurred as per the applicable securities law... it would enhance the company’s operational, financial and strategic flexibility including but not limited to corporate restructurings, acquisitions, exploring new financing structures including financial support from the members of the promoter group...,” promoters of Allcargo Logistics had said in their proposal.
However, with public shareholders defeating the proposal of the promoters to delist Allcargo Logistics, it would be interesting to see how things turn out for the company in future.
At 14.44pm Tuesday, Allcargo Logistics was trading 2.55% down at Rs231 on the BSE, while the benchmark Sensex was up 75 points at 58,252 points.