As many as 283 shareholders of the Bank of Rajasthan, including one of its founding

members, today moved the Company Law Board alleging that its merger with ICICI
Bank was in violation of various regulatory norms.

ICICI Bank had approved the merger of BoR in its EGM on June 20.However, BoR
EGM for the same had faced legal hurdles and had to be referred to the RBI for its
approval.

Earlier, a lower court in Kolkata had given a stay order on the EGM to ratify the
proposed merger and BoR top executives had to walk out from the EGM. However, some
shareholders who had continued with the EGM had approved the merger.

Later on the same day, Calcutta High Court had revoked the stay order of the lower court.
Facing such a situation, BoR management couldn't take a final decision and had asked

The shareholders of Bank of Rajasthan have approved the bank's merger with ICICI Bank. The
bank's shareholders have passed a resolution with requisite majority under section 44A of the
Reserve Bank of India (RBI) Act and will file the EGM resolution with the Bombay Stock Exchange,
the National Stock Exchange and the bank.

This comes after a series of bizarre events on Tuesday, where the extraordinary general meeting
(EGM) that was called to approve the merger was first cancelled after a Kolkata civil court
restrained the management from holding the EGM. This was based on a complaint filed by a
shareholder who was against the merger. The bank then went ahead and informed the
exchanges that the EGM has been cancelled following a court order

: This is a very curious case that has happened. I don’t think we have had seen something similar
happened before. Obviously in the first instance the Bank of Rajasthan took all the necessary
steps and did the process as per the Companies Act and fixed up a date for the meeting and tried
to hold this meeting.

In the meantime before the meeting could be held, a stay order was passed by the Calcutta city
civil court. Effectively the way we interpret this and the way I would look at it is that the stay order
would operate on the company because effectively the management and the Board of the
company and Chairman who is a member of the Board are the managers of the company. But a
stay order directing the management not to hold the meeting would effectively mean that the
company should not hold the meeting. So that’s the first point.

So in terms of the management then being made aware of this order and then deciding that well
there is a stay now and so we really can’t hold this meeting and therefore not holding the
meeting, I think they took the right step in doing that.

Of course you had all the shareholders who had gathered here and they decided that they could
appoint their own Chairman and continue with the meeting. There is no real process for
something like this. What the Companies Act provides is that 10% of the shareholders of a
company could requisition a meeting and make a request to the Board of the company to hold a
meeting, and then the Board would be mandated to hold such a meeting within a period of three
weeks of such a requisition again by following all the procedures.
Although you may have had the 10% who could have requisitioned the meeting but the onus
eventually was on the Board to then to take it forward. So if you look at it from a very technical
perspective, whether that shareholders meeting is a validly held meeting or not is very
questionable. From a company law point of view it could easily be a 50-50 case. Maybe that
meeting was not valid in its own right.

So I think the management did the right thing because they were given a stay order and they
said, fine we can’t hold this until we do something about it. So that’s how we would look at that
first phase.

Now what you have is the Calcutta High Court reversing that lower court order and saying that we
vacate the stay. But I don’t believe that such a vacation of this stay would be retrospective. So
again if you look back in point of time on the day of the meeting there was a stay which prevented
the management and thereby the company from going ahead with the meeting.

So the way we would look at it and the way one would go if you look at the process was that, now
there is no stay and now it is again open for the Bank of Rajasthan to have another meeting and
to actually just go ahead with the process in the two weeks or so if it can have a shorter notice
and so on under its article and reconvene the meeting which will put to rest the entire controversy
because otherwise without any real precedent and with different views on whether the court's
order is retrospective or not is just going to be nebulous and grey and again still subject to
challenges, some other activist shareholder wants to challenge that and go to the Supreme Court
which will again thwart and delay the entire process. So these are the issues as we look at them
based on the facts that have been presented.

DNA : Daily News & Analysis; Mumbai, Jun 02,

2010
The proposed merger of Bank of Rajasthan (BoR) with the ICICI Bank has come under
the market regulator Securities and Exchange Board of India's (Sebi) scanner after
revelations that there was a delay in informing the stock exchanges about the deal to
allegedly facilitate inside trading. According to sources, the Sebi is investigating trading
activity leading up to BoR-ICICI Bank merger.

At 4.30 am on May 18 the Tayal Group, owning 55% of Bank of Rajasthan (BoR), sealed
a merger deal with the ICICI Bank. For a good 12 hours, the deal was kept a secret. The
stock exchange was informed at 5 pm in the evening, one-and-half-hours after the closing
bell.

Taking advantage of this delay, investors bought more than three crore shares of Bank of
Rajasthan, several times higher than the daily average traded volume. Documents
available with DNA reveal that BoR share prices surged by 20% in a single day making
those who bought it richer by nearly Rs60 crore.

Many, however, sold their shares unaware of the agreement between the dominant BoR
shareholding group led by bank's director SK Tayal and the ICICI Bank. The inordinate
lapse triggered a sharp reaction from the Jaipur Stock Exchange (JSE), which shot off a
letter to the company secretary of BoR, RK Agrawal, on the same day, asking him to
clarify the reasons for not informing the stock exchange well in time as the information
was price sensitive and had a significant impact on the movement of BoR's share prices.
The JSE pointed out that BoR share went up 75% in four trading session.

Sources said on Tuesday that Sebi's investigation arm was looking at possible inside
trading and had called for the trading data from the Jaipur Stock Exchange.

According to sources, Sebi would also secure data from surveillance departments of
Bombay Stock Exchange and National Stock Exchange regarding the deal.

ICICI Bank Ltd’s takeover of Bank of Rajasthan Ltd (BoR) will have to clear a new regulatory hurdle before it can be
completed, according to a senior official in the industry ministry. Most banking mergers can move ahead once they get a
green signal from the Reserve Bank of India (RBI), but the deal between India’s largest private sector lender and the
troubled regional bank will need to be cleared by the government as well because of the provisions of a controversial
policy that categorizes ICICI Bank as a foreign-owned one; despite its local presence and Indian management. “The
merger needs the approval of the FIPB (Foreign Investment Promotion Board) under Press Note 3.
Under the Press Note 3 of 2009 series, if the ownership of an existing Indian company is transferred to a non-resident
entity, as a consequence of transfer of shares to nonresident entities through amalgamation, merger or acquisition, then it
would require FIPB approval.
Private sector lenders ICICI Bank and HDFC Bank Ltd were defined as foreign-owned under the new rules since more
than half their equity is owned by foreign entities, including foreign institutional investors, who have no board presence or
say in company policy.
This regulation is applicable in sectors with foreign direct investment (FDI) caps, such as defense production, private
sector banking, broadcasting, commodity exchanges, insurance, print media, telecommunications and satellites,
according to the press note. Any foreign firm trying to gain control of local companies needs the prior approval of FIPB.
A spokesperson for ICICI Bank said the bank would not comment on any issue relating to BoR till the conclusion of its
board meeting on 23 May. The two banks agreed this week to merge in a deal that has met with a cold reception from
investors and analysts. An analyst with a consulting firm, who spoke on condition of anonymity, said either of the banks
needs to approach FIPB for approval. “It does not matter which bank approaches FIPB. One entity can also approach
FIPB on behalf of the other,“ he said.
Under the new regulations, ICICI Bank, with another six banks, has become a foreign- owned lender as overseas entities
hold more than 50% of the company's stake. The shareholding of foreign institutional investors in ICICI Bank as on 31
March was 65.30%.
RBI had pointed out that the new norms will create a new set of banks that are “owned by foreigners, but controlled by
Indians“, thus creating a regulatory challenge for the central bank. However, commerce and industry minister Anand
Sharma recently said that no change in the new FDI regulation was needed as it was working just fine.

Mumbai/Kolkata

Bank of Rajasthan’s extraordinary general meeting (EGM) to approve its merger with ICICI Bank saw many
a dramatic twist today with a Kolkata court staying it, only to be vacated by the High Court a few hours later.

The merger finally sailed through.The meeting to approve the merger of Udaipur-based BoR with the
country’s largest private sector lender ICICI Bank got off to a chaotic start, when the BoR management said
it was cancelling the meet following a stay obtained by an investor from a civil court.
The XIth Bench of Civil Court in Kolkata stayed the EGM till further orders on a plea by shareholder Satya
Brata Das.
However, Bank of Rajasthan moved the Calcutta High Court contending that the city court did not have
jurisdiction to hear the matter. The High Court vacated the stay.
“BoR EGM has happened. A lower court in Kolkata had issued an injunction against holding of the EGM.
The Calcutta High Court has now stayed the lower court order,” an ICICI Bank spokesperson told PTI from
Vadodara.
Simultaneously, ICICI Bank EGM was held in Vadodara and transacted the business as per agenda and the
results on approval for merger would be known tomorrow, he said.
Minutes before the BoR EGM was to start in Mumbai, the company secretary announced that its managing
director had received a fascimile from an advocate in Kolkata stating that the meeting was stayed by a court
there.
To add to the drama, BoR employees struck work protesting violation of shareholding guidelines by the
promoters Tayal family and opposing the merger with ICICI Bank.
In Jaipur, United Forum of BoR Unions convener Gopal Das Gupta claimed that the strike hit banking
operations in the Pink city.
Livid at the cancellation of the EGM in Mumbai, about 1,000 shareholders started raising slogans. They then
went ahead with the voting, with one of them chairing the session.
A shareholder VN Prasad said that ballots would be scrutinised by two scrutinisers, after which it would be
submited to the RBI and stock exchanges.
“One of the shareholders has got a court stay against conducting the EGM (which was called to seek
shareholders approval for the merger). Now the shareholders are meeting to discuss how to proceed with
the agenda,” Bank of Rajasthan executive director KK Sharma said.
ICICI Bank last month agreed to take over Bank of Rajasthan in a share-swap deal that valued the Udaipur-
based bank at over Rs 3,000 crore