EXHIBIT 1.2
[VSNL LOGO]
MEMORANDUM
AND
ARTICLES OF ASSOCIATION
OF
VIDESH SANCHAR NIGAM LIMITED
REGISTERED OFFICE:
VIDESH SANCHAR BHAVAN
MAHATMA GANDHI ROAD
MUMBAI - 400 001.
[CERTIFICATE OF INCORPORATION]
[CERTIFICATE FOR COMMENCEMENT OF BUSINESS]
[VSNL COMPANY LOGO] Videsh Sanchar Nigam Limited Memorandum of Association
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(THE COMPANIES ACT, 1956)
COMPANY LIMITED BY SHARES
MEMORANDUM OF ASSOCIATION
OF
VIDESH SANCHAR NIGAM LIMITED
I. The name of the Company is VIDESH SANCHAR NIGAM LIMITED.
II The registered office of the Company will be situated in the State of
Maharashtra.
III Objects for which the Company is established are:
A. THE MAIN OBJECTS OF THE COMPANY TO BE PURSUED BY THE COMPANY ON ITS
INCORPORATION ARE:
1. Pursuant to an agreement to be entered into to take over the entire
management, control, operations and maintenance of the Overseas
Communications Service (OCS) of the Department of Telecommunications,
Ministry of Communications, Government of India, with all its assets
and liabilities including contractual rights and obligations on such
terms and conditions as may be prescribed by the Government of India
from time to time.
2. To plan, establish, develop, provide, operate and maintain all types of
international telecommunication net-works, systems and services
including Telephone, Telex, Message Relay, Data transmission,
Facsimile, Television, Telematics, Value Added Network Services, New
Business Services, Audio and Video Services, Maritime and Aeronautical
Communication Services and other international telecommunications
services as are in use elsewhere or to be developed in future.
3. To plan, establish, develop, provide, operate and maintain
telecommunications systems and networks within India as are found
necessary for international telecommunications.
4. To provide and maintain international leased telecommunication
services.
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(1)[5. To design, develop, install, maintain, operate long distance domestic
and international basic and value added telecommunications, global
mobile telecommunications, electronic mail services, globally managed
data networks, data telecom networks, video conferencing, international
gateway networks, satellite networks in and outside India by way of
Joint Venture partnerships which should be in conformity with overall
licensing conditions defined from time to time by Government of India.]
6. To raise necessary financial resources for its development needs for
telecommunication services/facilities.
B. THE OBJECTS INCIDENTAL OR ANCILLARY TO THE ATTAINMENT OF THE MAIN
OBJECTS ARE AS FOLLOWS:
7. To collect and settle revenue, rental, leased charges and other charges
payable to the Company by persons, companies, agencies and
administrations for the services provided and to utilise the same for
furtherance of activities of the Company.
(2)[8. To participate in seminars, expositions and exhibitions and attend
meetings of the technical, planning, financial, maintenance, management
and administrative committees of international organisations, like
International Telecommunication Union, INTELSAT, INMARSAT, CTO, Asia
Pacific Telecommunity, Indian Ocean Commonwealth Cable, and India-UAE
Cable.
9. To acquire from any person, firm or body corporate whether in India
and/or outside India in the public or private sector, technical
information, know-how, process engineering, manufacturing and operating
data, plans, layouts and blue prints useful for design, erection,
construction, commissioning, operation and maintenance of plant and
equipment required for any of the business of the Company and to
acquire any grant or licence and other rights and benefits in the
foregoing matters and things.
10. To buy in India or outside India any plants, equipments and auxiliaries
which can be advantageously utilised by the Company to attain its
objects and carry on operations or
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(1) Clause 5 inserted and subsequent clauses 5 - 57 renumbered as 6 - 58 as per
Special Resolution passed at the 13th AGM held on 30 September 1999.
(2) Clause 8 & 9 deleted and subsequent clauses 10 to 58 renumbered as 8 to 56
as per Special Resolution passed at the 16th AGM held on 20 August 2002.
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[VSNL COMPANY LOGO] Videsh Sanchar Nigam Limited Memorandum of Association
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business of any nature which the Company from time to time may deem fit
or expedient to carry on in connection with its business at any time
being conducted.
11. To build, construct, maintain, enlarge, pull down, remove or replace,
dispose off, improve or develop and work, manage, and control any
buildings, offices, godowns, warehouses, shops, machinery and plant and
telephone exchanges, telex exchanges, message relay systems, microwave
stations, repeater stations, telecommunications lines, cables, towers,
or any other equipment, plant and machinery connected with design,
development, construction, maintenance and operation of
telecommunications services and conveniences, which may seem calculated
directly or indirectly to advance the interests of the Company and to
subsidise, contribute to or otherwise assist or take part in doing any
of these things, and/or to join with any other person and/or company
and/or with any Governmental authority in doing any of these things.
12. To establish/construct and maintain or wind up branch offices and/or
new offices in and outside India as may be necessary to protect and
promote the interests of the Company.
13. To carry on the business of manufacture of the equipment required for
telecommunication systems, networks and services.
14. To purchase or sell, take or give on lease or licence or in exchange,
hire or otherwise acquire or dispose any immovable and/or movable
property and any rights or privileges which the Company may think
necessary or convenient for the purposes of its business or may enhance
the value of any other property of the Company and in particular, any
land (freehold, leasehold, or other tenure) buildings, easements,
machinery, plant and stock-in-trade and on any such lands to erect and
to lend/advance money for the erection of buildings, factories, sheds,
godowns or other structures for the works, for purposes of the Company
and also for the residence and amenity of its employees, staff and
other workmen and erect and install machinery and plant and other
equipment deemed necessary or convenient or profitable for the purposes
of the Company.
15. To engage in research, development, study and experiments relating to
all the aspects of telecommunications, to collect, prepare and
distribute information and statistics relating to any of the aspects
pertaining to telecommunications working in India or outside India and
to promote or propose such methods, studies and measures as may be
considered desirable by or beneficial to the interests of the Company.
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16. To receive or pay remuneration, assist and finance in India and/or
outside India any industrial undertaking, project or enterprise,
whether owned or run by Government, Statutory Body, private company,
firm or individual with capital credit or resources for execution of
its work and business by or to the Company.
17. To design, establish, provide, maintain and perform engineering,
technical and consultancy services for any administration, person, firm
or body corporate, for development of telecommunications projects of
all types/descriptions in India and outside India including but not
limited to surveys of all types, feasibility reports, detailed project
reports, techno-economic investigations, supply of basic engineering
and detailed design and making drawings, layouts and blue prints for
construction of telecommunication facilities, preparation of tender
documents, tender evaluation, purchase assistance, construction,
supervision, project management, acceptance testing, commissioning,
maintenance, training of personnel and such other services.
18. To receive engineering, technical and management consultancy services
for telecommunications but not limited to engineering, commercial, and
operational management of telecommunications systems, market research
and personnel management.
19. (a) To pay for any rights, facilities and property acquired by the
Company and to remunerate any person, company, administration, or body
whether by cash payment or by allotment of shares, debentures or other
securities of the Company credited as paid up in full or in part or
otherwise.
(b) To receive payment for any rights, facilities and property
provided by the Company and to receive remuneration from any person,
company, administration or body either by cash payment, allotment of
share, debentures or other securities.
20. Subject to the provisions of the Companies Act, 1956 and directives of
Reserve Bank of India, to borrow or raise money or to receive money on
deposit or loan including public deposit at interest otherwise in such
manner as the Company may think fit and in particular by the issue of
the debentures or debenture stock or bonds, perpetual or otherwise, and
which may or may not be convertible into shares, in this or any other
company, and to secure the repayment of any such money borrowed, raised
or received, or owing by mortgage, pledge, charge or lien upon all or
any of the property, assets, or revenue of the Company (both present
and future) including its uncalled capital and to
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give the lenders or creditors the power of sale and other powers as may
seem expedient to purchase, redeem or pay off any such securities and
also by a similar mortgage, charge of lien to secure and guarantee the
performance of the company or any person, firm or company or any
obligation undertaken by the Company of any other person, firm or
company as the case may be.
21. To issue or guarantee the issue of or the payment of interest on
debentures or other security or obligations of any company or
association and to pay or provide for brokerage, commission and
underwriting in respect of such issue.
22. Subject to the provisions of the Companies Act, 1956 and directives of
the Reserve Bank of India, to receive money on deposits for interest or
otherwise and to lend or advance money with or without security to such
companies, firms or persons and Government departments and on such
terms and conditions as may seem expedient and in particular to
customers, suppliers and others having dealings with this Company and
to guarantee the performance of contracts or obligations by any such
persons, companies and firms, provided that the company shall not carry
on the business of Banking as defined by the Banking Regulations Act,
1949.
23. To invest and deal with the moneys of the Company not immediately
required in such manner as may be thought fit and as determined by the
Board of Directors of the Company from time to time.
24. To enter into any contracts or arrangements for the more efficient
conduct of the business of the Company or any part thereof and to
sublet any contracts from time to time.
(3)[25. (i) To negotiate and/or enter into agreements and contracts with
individuals, companies, corporations, bodies corporate and/or such
other organisations in India and abroad including governments and
governmental or semi-governmental bodies of other sovereign states, for
obtaining or providing know-how or technical and/or financial
collaboration or any other such assistance for carrying out any
business or transactions which the Company is authorised to carry on
and also for the purpose of activating research and development and to
acquire or provide, exploit, use necessary formulae inventions, utility
models and patent rights for furthering the objects of the Company.
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(3) Clause 25 (i) & (ii) amended as per Special Resolution passed at the 16th
AGM held on 20 August 2002.
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(ii) Subject to Section 391, 394, and 394A of the Companies Act,
1956, to amalgamate or take over or merge with or reconstruct the
business of the Company with any other person, organisation, firm,
company, body corporate whether incorporated or not and whether
registered in India or otherwise, or enter into partnership or into any
other arrangement for `sharing of profits, union of interest,
co-operation, joint venture, reciprocal concession or co-operation or
for limiting competition or otherwise, with any person, persons or
company or body corporate or other organisations carrying on or engaged
in or about to carry on, or engage in or being authorized to carry on
or to bifurcate one or more units of the Company in one or more
companies for the interest of the Company and to give or accept by way
of consideration for any of the acts or things aforesaid or property
acquired, any shares, debentures, debenture-stock or other debt
instruments or securities including futures, options, derivatives that
may be agreed upon, and to hold and retain, sell, mortgage, pledge,
encumber and deal with any shares, debentures, debenture-stock or
securities, options, futures, derivatives, instruments so received or
offered. Provided that such arrangement is for the purpose of business
which the Company is authorised to carry on.]
26. To distribute or otherwise as may be resolved, any property or assets
of the company or any proceeds of sale or disposal of any property or
assets of the company in case of winding up of the company, including
the shares, debentures or other securities or any other securities of
any other company formed to take over the whole or any part of the
assets or liability of the company so that no distribution amounting to
a reduction of capital may be made except with the sanction of (if any)
for the time being required by law and subject to the provisions of the
Companies Act in the event of winding up.
27. To vest any immovable or movable property, rights or interests acquired
by or belonging to the company in any person or company on behalf of or
for the benefit of the company and with or without any declared trust
in favour of the company.
(4)[28. To carry on the business which the Company is authorised to carry on by
means or through the agency of any subsidiary company or other
associate or affiliate companies or other business organisation in
India or abroad and to enter into any arrangement with any such company
for taking the profits and bearing the losses of any business so
carried on
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(4) Amended as per Special Resolution passed at the 13th AGM held on 30
September 1999.
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or for financing any such company or business organisation or
guaranteeing its liabilities or obligations or to make any other
arrangements which may seem desirable with reference to any other
business so carried on by the Company with a power at any time to close
any such business either temporarily or permanently and or to appoint
Directors or Managers or administrators of any such company or business
organisations.]
29. To generally do and perform all the above acts and such other things as
may be deemed incidental or conducive to the attainment of the above
objects or of any of them.
30. To buy, sell and deal in minerals, plant, machinery, implements,
conveniences, provisions and things capable of being used in connection
with the business of the company.
31. To purchase, create, generate, or otherwise acquire, use, sell or
otherwise dispose of, electric current and electric, steam and water
power of every kind and description, and to sell, supply or otherwise
dispose of, light, heat and power of every kind and description.
32. To acquire and take over all or any part of the business, goodwill,
property and other assets, and to assume or undertake the whole or any
part of the liabilities and obligations of any person, form,
association or corporate body or Government department carrying on a
business which the company is or may become authorised to carry on, and
to pay for the same in cash, shares, stocks, debentures or bonds of the
company, or otherwise and to hold, manage, operate, conduct, and
dispose of in any manner, the whole or any part of any such
acquisitions and to exercise all the powers necessary or convenient in
and about the conduct and management thereof.
33. To merge, amalgamate or consolidate with any corporate body heretofore
or hereafter create in such manner as may be permitted by law.
34. To cause the company to be registered or recognised in any part of the
world.
35. To make, draw, accept, endorse, discount, execute and issue cheques,
promissory notes, hundies, bills of exchange, bills of ladings,
warrants, debentures, and other negotiable or transferable
instruments/securities.
36. To do all or any of the above things and all such other things as are
incidental or may be thought conducive to the attainment of the above
objects or any of them and as principals, agents, contractors, trustees
or otherwise and either along or in conjunction with others.
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37. To carry out or to have carried out experiment and research in
laboratory, pilot plant and on industrial scale, and to incur expenses
necessary therefor with a view to improve on the present method and
process of working the several business activities which the company is
authorised to carry on.
38. To apply for purchase, or otherwise acquire, and protect and renew in
any part of the world any patents, patent rights, bravet d'inventions,
trade marks, designs, licences, concessions and the like, conferring
any exclusive or non-exclusive or limited rights, their use, or any
secret or other information as to any invention which may seem capable
of being used for any of the purposes of the company or the acquisition
of which may seem calculated directly or indirectly to benefit the
company, and to use, exercise, develop or grant licences in respect of,
or otherwise turn to account the property, rights or information so
acquired, and to expend money in experimenting upon, testing or
improving any such patents, inventions or rights and without prejudice
to the generality of the above, any contracts, or in relation to the
supply and sale of any materials, articles or things for or in relation
to the construction, execution, carrying out, improvement, management,
administration or control of any works and conveniences required for
the purpose of carrying out any of the aforesaid business and to
undertake, execute, carry out, dispose of or otherwise turn to account
such contracts.
39. To sell, dispose of or transfer any building, industrial undertaking,
projects or factory to any company or association or concern carrying
on similar business on such terms and conditions as may be determined
by the company.
40. To acquire from any Government (Central, State, Local or Foreign) or
public body, persons, authority, or from any private individual any
concessions, grants, decrees, rights, powers and privileges whatsoever
which may seem to the company directly or indirectly conducive to any
of its objects or capable of being carried on in connection with its
business and to work, develop, carry out, exercise and turn to account
the same and to oppose any proceedings or applications which may seem
calculated directly or indirectly, to prejudice the company's
interests.
41. To provide against payment of charges or fees as may be prescribed from
time to time, residential and/or resting accommodation, medical and
welfare facilities for the employees of the company and in connection
therewith to afford to such persons, facilities and conveniences for
transport, washing, bathing, cooking, reading, writing and for the
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[VSNL COMPANY LOGO] Videsh Sanchar Nigam Limited Memorandum of Association
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purchase, sale and consumption of provisions, both liquid and solid and
for the safe custody of goods.
42. To exchange, sell, convey, assign or let on lease or grant licence for
the whole or any part of the company's immovable properties and to
accept as consideration or in lieu thereof other land or cash or
Government securities, or securities guaranteed by Government or shares
in joint stock companies or partly the one and partly the other or such
other property or securities as may be determined by the company and to
take back or re-acquire any property so disposed of by repurchasing or
obtaining a licence or lease on such price or prices and on such terms
and conditions as may be agreed upon.
43. To employ foreign or other technicians, experts, advisers, or
consultants, or to lend the services or the employees of the company on
a contract basis for the furtherance of company's objectives aforesaid.
44. (a) To train and pay for the training in India or abroad of any of
the company's employees under such terms and conditions as may be
prescribed from time to time, and to establish, maintain and operate
training institutions for its employees.
(b) To provide attachment or training facilities to Indian or
foreign nationals on the terms and conditions agreed upon.
45. To improve, manage, develop, grant rights or privileges in respect of,
or otherwise deal with, all or any part of the property and rights of
the company.
46. To promote and form and to be interested in and take hold and dispose
of shares in other companies having objects in whole or in part similar
to those of the company and to transfer to any such company any
property of this company, and to take or otherwise acquire, hold and
dispose of shares, debentures and other securities in or of any such
company and to subsidise or otherwise assist any such company.
47. To pay out of the funds of the company all costs, charges and expenses
which the company may lawfully incur with respect to the promotion,
formation and registration of the company or which the company shall
consider to be preliminary including therein the cost of advertising,
printing and stationery, expenses attendant upon the formation of
agencies, branches and local boards.
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48. To establish and maintain or procure the establishment and maintenance
of any contributory provident funds, contributory or non-contributory
pension or superannuation funds for the benefit of, and give or procure
the giving of donations, gratuities, pension, bonus, annuities or other
allowances or emoluments to any persons who are or were at any time in
the employment and/or service of the company, or of any company which
is a subsidiary of the company or is allied to or associated with the
company or with any such subsidiary company or who are or were at any
time the Directors or officers or staff of the company or of any such
other company as aforesaid, and the employees or ex-employees of the
company or Government department formerly engaged in any business
acquired by the company and the wives, widows, families and dependants
of any such persons, and also establish and subsidise and subscribe to
any charitable or public object, institutions, society, associations,
clubs or funds and by providing or subscribing or contributing toward
places of instruction and recreation, hospitals and dispensaries,
medical and other attendance and by building or contributing to the
building of houses, dwellings, calculated to the benefit of or to
advance the interests and well being of the company or of any such
other company or department as aforesaid or its employees and to make
payment to or towards the insurance of any such person as aforesaid and
to any of the matters aforesaid either alone or in conjunction with any
such other company as aforesaid.
49. To create any depreciation fund, reserve fund, sinking fund or any
other special fund, whether for depreciation or for repairing,
improving, extending or maintaining any of the property of the company
or for any other purpose conducive to the interest of the company.
50. To adopt such means of making known the business of the company or in
which the company is interested as may seem expedient and in particular
by advertising in the press, circulars, publication of books and
periodicals, audio and audio-visual media, exhibitions and by granting
prizes, rewards and concessions.
51. To enter into, make and perform contracts and arrangements of every
kind and description for any lawful purpose with any person, firm,
association, corporate body, municipality, body politic, territory,
province, state, Government or colony or dependency thereof, without
limit as to amount, and to obtain from any Government or authority any
rights, privileges, contracts and concessions which the company may
deem desirable to obtain, and to carry out, exercise or comply with any
such arrangements, rights, privileges, contracts and concessions.
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52. To subscribe or guarantee money for any national, charitable,
benevolent, public, general or useful object or for any exhibition, or
for any purpose which may be considered likely directly or indirectly
to further the objects of the company or the interest of its members.
53. To layout and prepare any land for any kind of athletics, sports and
for the playing of such sports or kind of amusement or entertainment
and to construct the stands and buildings and conveniences for use in
connection therewith.
54. To act as agents and as trustees for any person or company and to
undertake and perform sub-contracts and to do all or any of the above
things in any part of the world and as principals, agents, contractors,
trustees or otherwise and by or through agents, sub-contractors,
trustees or otherwise and either alone or jointly with others in
connection with the business of the company.
C. OTHER OBJECTS:
55. To purchase or otherwise acquire and to hold, own, invest, trade and
deal in, mortgage, pledge, assign, sell, transfer or otherwise dispose
of goods, equipment, machinery, wares, merchandise and personal
property of every class and description and to transport the same in
any manner.
56. To carry on the business of a store keeper in all its branches and in
particular, to buy, sell and deal in goods, stores, consumable
articles, chattels and effects of all kinds, both wholesale and
retail.(2)
IV. The liability of the members is limited.
(5)[V. The authorised Share Capital of the Company is Rs.300,00,00,000/-
(Rupees Three Hundred Crore) divided into 30,00,00,000 (Thirty Crore)
Equity Shares of Rs.10/-(Rupees Ten) each with the rights, privileges
and conditions attaching thereto as may be provided by the Articles of
Association of the Company for the time being.]
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*****
(2) Clause 8 & 9 deleted and subsequent clauses 10 to 58 renumbered as 8 to 56
as per Special Resolution passed at the 16th AGM held on 20 August 2002.
(5) Amended vide Ordinary Resolution passed by the shareholders at 14th AGM held
on 26 September 2000.
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[VSNL COMPANY LOGO] Videsh Sanchar Nigam Limited Memorandum of Association
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We, the several persons whose names and addresses are subscribed, are desirous
of being formed into a company in pursuance of this Memorandum of Association
and we respectively agree to take the number of shares in the capital of the
company set opposite our respective names.
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Name, Signature,
No. of Address, Description
Address, Description and Signature of Shares & Occupation of
Name Occupation Subscribers Equity witness
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1. President of India Daljit Singh, S/o.
Through Devendra Kumar Secretary, Department of Sd/- 100 Shri Jogendar Singh,
Sangal (S/o. Shri Telecommunications, Sanchar Dy. Director General,
Hardhian Singh Jain) Bhavan, New Delhi. OCS, VSB, New Delhi.
Secretary,
Telecommunications.
2. Shree Shankar Sharan, Additional Secretary, Dept. Sd/- 10 - DO -
S/o. Late Shri Shambhu of Telecommunications,
Sharan Sanchar Bhavan, 20, Ashoka
Road, New Delhi
3. V. Devarajan, S/o. Additional Secretary and
Late Shri N. Financial Adviser, Dept. of
Venkataramanan Telecommunications, Sanchar Sd/- 10 - DO -
Bhavan, New Delhi.
4. K.C. Katiyar, S/o. Director General, Overseas V.D. Kulkarni, S/o.
Bhajanlal Katiyar Communications Service, D.G. Kulkarni,
Bombay. Director (Admn), OCS,
VSB, M.G. Road,
Sd/- 1 Bombay - 400 001.
5. A.W. Furtado, S/o. Addl. Director General, Daljit Singh, S/o.
Late Shri R.T. Furtado Overseas Communications Shri Jogendar Singh,
Service, VSB, Bombay. Sd/- 1 Dy. Director General,
OCS, VSB, New Delhi.
6. J.K. Chhabra, S/o. Director, Dept. of
Shri D.N. Chhabra Telecommunications, Sanchar
Bhavan, 20, Ashoka Road,
New Delhi. Sd/- 1 - DO -
7. S.D. Raheja, S/o. Late Dy. Financial Adviser,
Shri S.R. Raheja Dept. of
Telecommunications, Sanchar
Bhavan, 20, Ashoka Road, Sd/- 1 - DO -
New Delhi.
8. R.R. Anand, S/o. Late Under Secretary, Dept. of
Shri Gopal Das Anand Telecommunications, Sanchar
Bhavan, 20, Ashoka Road, Sd/- 1 - DO -
New Delhi.
9. K.P. Radhakrishnan Under Secretary, Dept. of
Kidave, S/o. Shri K.G. Telecommunications,
Kidave Sanchar Bhavan, New Delhi. Sd/- 1 - DO -.
-----------
126
ONE
HUNDRED
TWENTY SIX
EQUITY
Dated this 12TH DAY OF MARCH, 1986.
Place - Bombay.
*****
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[VSNL COMPANY LOGO] Videsh Sanchar Nigam Limited Articles of Association
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(THE COMPANIES ACT, 1956)
COMPANY LIMITED BY SHARES
ARTICLES OF ASSOCIATION
OF
VIDESH SANCHAR NIGAM LIMITED
Interpretation Clause. ARTICLE 1 - In the interpretation of the Memorandum
of Association and these Articles, the following
expressions shall have the following meanings, unless
repugnant to the subject or context.
The Act/or the said (a) "The Act" or "the said Act" means "The Companies
Act. Act, 1956", for the time being in force.
These Articles. (b) "These Articles" means these Articles of
Association as originally framed or as from time to
time altered by Special Resolution.
(6)[Beneficial Owner. (bB) "Beneficial Owner" means the beneficial owner as
defined in clause(a) of sub-section (1) of Section 2
of the Depositories Act, 1996.]
The Company. (c) "The Company" means VIDESH SANCHAR NIGAM LIMITED.
The Directors. (d) "The Directors" means the Directors for the time
being of the Company and includes persons occupying
the position of Directors by whatever name called.
(7)[Depositories Act, (dD)"Depositories Act, 1996" includes any statutory
1996 modification or re-enactment thereof and
Depository (dDD) "Depository" means a Depository as defined
under clause (e) of sub-section (1) of Section 2 of
the Depositories Act, 1996.]
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(6) Inserted vide special resolution passed by the shareholders at 12th AGM held
on 21 September 1998.
(7) Inserted vide special resolution passed by the shareholders at 12th AGM held
on 21 September 1998.
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The Board or Board of (e) "The Board," or the "Board of Directors" means a
Directors. meeting of the Directors duly called and constituted
or as the case may be, the Directors assembled at a
Board, or the requisite number of Directors entitled
to pass a circular resolution in accordance with the
Act.
The Chairman. (f) "The Chairman" means the Chairman of the Board of
Directors for the time being of the Company.
The Managing (g) "The Managing Director" includes one or more
Director. persons appointed as such or any of such persons or
Directors for the time being of the Company who may
for the time being be the Managing Director of the
Company.
The Office. (h) "The Office" means the Registered Office for the
time being of the Company.
The President. (i) "The President" means the President of India.
Capital. (j) "Capital" means the Share Capital for the time
being raised or authorised to be raised for the
purpose of the Company.
Register. (k) "Register" means the Register of Members of the
Company required to be kept pursuant to the Act.
The Registrar. (l) "The Registrar" means the Registrar of Companies,
of the State where the registered office of the
Company is situated.
Dividend. (m) "Dividend" includes bonus shares.
Month. (n) "Month" means a calendar month.
Seal. (o) "Seal" means the Common Seal for the time being
of the Company.
Proxy. (p) "Proxy" includes Attorney duly constituted under
a Power-of-Attorney.
In writing. (q) "In writing" and "written" shall include
printing, lithography and other modes of representing
or reproducing words in a visible form.
Plural Number. (r) Words importing the singular number also include
the plural number and vice versa.
Persons. (s) Words importing persons include corporations and
firms as well as individuals.
Gender. (t) Words importing masculine gender shall also
include the feminine gender.
14
[VSNL COMPANY LOGO] Videsh Sanchar Nigam Limited Articles of Association
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(8)[Government of India (u) "Government of India or Government" means the
Government. President of India, as represented by and acting
through the Ministry of Communications and
Information Technology, Government of India.]
(9)[Strategic Partner. (v) "Strategic Partner" means Panatone Finvest
Limited, a company duly incorporated and existing
under the provisions of the Companies Act, 1956 and
who has purchased 25% of the equity shareholding of
the Company from the Government of India, in the year
2002.
Shareholder(s). (w) "Shareholder(s)" means the Strategic Partner and
the Government.
Other Shareholders. (x)"Other Shareholders" means the shareholders of the
Company other than the Strategic Partner and the
Government.
All Shareholders. (y) "All Shareholders" means collectively the
Strategic Partner, Government and Other Shareholders.
Parties. (z) "Parties" means collectively the Government and
the Strategic Partner and Party means either of them.
Affiliate. (aa)"Affiliate", with respect to a specified Person,
means any other Person (a) directly or indirectly
Controlling, Controlled by or under common Control
with such specified Person; and/or (b) which is a
holding company or subsidiary of such specified
Person; provided, however, that for the purposes of
this Agreement:
(i) the terms "holding company" and
"subsidiary" shall have the meanings set
forth in Section 4 of the Act and;
(ii) in no event shall the Company be deemed
an Affiliate of either the Government or the
Strategic Partner;
Controlling, Controlled (bb)"Controlling", "Controlled by" or "Control", with
by or Control. respect to any Person, means the possession, directly
or indirectly, of the power to direct or cause the
direction of the management, business or policies or
actions of such Person, whether through the ownership
of voting securities, by contract or otherwise, or
the power to elect or appoint at least 50% of the
directors, managers, partners or other individuals
exercising similar authority with respect to such
Person(s);
Person. (cc)"Person" means any individual, sole
proprietorship, unincorporated association,
unincorporated organization, body corporate,
corporation, company, partnership, limited liability
- ---------------
(8) Modified vide special resolution passed by the shareholders at 16th AGM held
on 20 August 2002.
(9) Inserted vide special resolution passed by the shareholders at 16th AGM held
on 20 August 2002.
15
[VSNL COMPANY LOGO] Videsh Sanchar Nigam Limited Articles of Association
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company, joint venture, Government Authority or trust
or any other entity or organization;
Audited Financial (dd)"Audited Financial Statement" shall mean the
accounts of Statement. the Company as on 31 March
2001 prepared and audited by M/s. Khandelwal Jain &
Co. and M/s. Kalyaniwala & Mistry and that have been
made available to the Strategic Partner;
Principal(s). (ee)"Principal(s)" means a Person or Person(s), other
than the Government, who Control(s) a Shareholder
(other than the Government) in relation to the
Strategic Partner;
Shareholders' (gg) "Shareholders' Agreement" means the agreement
Agreement. dated 13th February 2002, entered into between the
Government and the Strategic Partner, to record the
manner in which the business of the Company is to be
conducted as between the Government and the Strategic
Partner.]
(10)[Expression in the (hh) Subject as aforesaid, any words or expressions
Act to bear same defined in the Act, shall, except where the subject
meaning in Articles. or context forbids, bear the same meaning in these
Articles.
Marginal Notes. (ii) The marginal notes hereto shall not affect the
construction of the Articles.]
Table "A" not to apply. ARTICLE 2 - The regulations contained in Table "A" in
the first Schedule to the Act shall not apply to the
Company.
Company to be ARTICLE 3 - The regulations for the management of the
governed by these Company and for the observance of the members thereof
Articles. and their representatives shall, subject to any
exercise of the statutory powers of the Company in
reference to the repeal or alternation of or addition
to its regulations by special resolution as
prescribed or permitted by the Act, besuch as are
contained in these Articles.
Company's shares not ARTICLE 4 - No part of the funds of the Company shall
to be purchased. be employed directly or indirectly in the purchase of
or in loans upon the security of the Company's
shares.
CAPITAL AND SHARES
(11)[Share Capital. ARTICLE 5 - Authorised share capital of the Company
shall be Rs.300,00,00,000 (Rupees Three hundred
crores only) divided into 30,00,00,000 (Thirty
crores) equity shares of Rs.10/- (Rupees Ten only)
each.]
(12)[Power to increase ARTICLE 6 - The Board may, from time to time, with
the sanction
- ---------------
(10) Renumbered vide special resolution passed by the shareholders at 16th AGM
held on 20 August 2002.
(11) Amended vide special resolution passed by the shareholders at 14th AGM held
on 26 September 2000.
16
[VSNL COMPANY LOGO] Videsh Sanchar Nigam Limited Articles of Association
- --------------------------------------------------------------------------------
share capital. of the Company in a general meeting, increase the
share capital by such sum to be divided into shares
of such amounts as the resolution shall prescribe.]
Commission. ARTICLE 7 - The Company may, at any time, pay
commission to any person for subscribing or agreeing
to subscribe (whether absolutely or conditionally)
for any shares, debentures, or debenture stock of the
Company or procuring or agreeing to procure
subscription (whether absolute or conditional) for
any shares, debentures or debenture stock of the
Company but so that if the commission in respect of
shares shall be paid or payable out of capital the
statutory conditions and requirements shall be
observed and complied with and the amount or rate of
commission shall not exceed 5% on the price of shares
and 2 1/2 % on the price of debentures or debenture
stock, in each case subscribed or to be subscribed.
The commission may be paid or satisfied in cash or in
shares, debentures or debenture stock of the Company.
(13)[On what condition ARTICLE 8 - New shares shall be issued upon such
new shares may be terms and conditions and with such rights and
issued. privileges annexed thereto as the general meeting
resolving upon the creation thereof shall direct and
if no direction be given as the Board shall
determine.
How far new shares to ARTICLE 9 - Except so far as otherwise provided by
rank with existing the conditions of issue, or by these Articles, any
shares. capital raised by the creation of new shares shall be
considered part of the original capital and shall be
subject to the provisions herein contained with
reference to the payment of calls and installments,
transfer and transmission, lien, voting, surrender
and otherwise. Such new shares shall rank pari passu
with the existing shares in all respect except for
the purposes of dividend that shall be pro rated to
the period for which such newly issued shares are in
existence.
Reduction of capital. ARTICLE 10 - Subject to the provisions of Section 100
to 104 of the Act, the Company may, from time to
time, by special resolution reduce its capital by
paying off capital or canceling capital which has
been lost or is unrepresented by available assets, or
is superfluous by reducing the liability on the
shares or otherwise as may be expedient, and capital
may be paid off upon the footing that it may be
called up again or otherwise; and the Board may,
subject to the provisions of the Act, accept
surrender of shares.
Sub-division and ARTICLE 11 - The Company in general meeting may, from
consolidation of time to time, sub-divide or consolidate its shares or
shares. any of them and exercise any of the other powers
conferred by Section 94 of
- ---------------
(12) Amended vide special resolution passed by the shareholders at 16th AGM held
on 20 August 2002.
(13) Amended vide special resolution passed by the shareholders at 16th AGM held
on 20 August 2002.
17
[VSNL COMPANY LOGO] Videsh Sanchar Nigam Limited Articles of Association
- -------------------------------------------------------------------------------
the Act and shall file with the Registrar such notice
of exercise of any such powers as may be required by
the Act.
Provided however that the provision relating to
progressive numbering shall not apply to the shares
of the Company which have been dematerialised.]
Power to modify. ARTICLE 12 - If at any time, the capital of the
Company by reason of the issue of preference shares
or otherwise, is divided into different classes of
shares, all or any of the rights attached to the
shares of each class may, subject to the provisions
of Section 106 and 107 of Act be varied with the
consent in writing of the holders of at least
three-fourth of the issued shares of that class or
with the sanction of a special resolution passed at a
separate meeting of the holders of issued shares of
that class and all the provisions hereinafter
contained as to general meeting shall, mutatis
mutandis, apply to every such meeting.
(14)[Allotment of shares. ARTICLE 13 - Subject to the provisions of these
Articles, the shares shall be under the control of
the Board of Directors who may allot or dispose of
the same, or any of them, to such persons, upon such
terms and conditions, at such times, and upon such
consideration as the Board may think fit. Provided
that option or right to call of shares shall not be
given to any person or persons without the sanction
of the company in General Meeting.]
Instalments of shares ARTICLE 14 - If by the conditions of allotment of any
to be duly paid. share, the whole or part of the amount or issue price
thereof shall be payable by instalments, every such
instalment shall, when due, be paid to the Company by
the person who, for the time being, shall be the
registered holder of the shares or by his executor or
administrator.
Liability of joint- ARTICLE 15 - The Joint Holders of a share shall be
holders of shares. severally as well as jointly liable for the payment
of all instalments and calls due in respect of such
share.
How shares may be ARTICLE 16 - Shares may be registered in the name of
registered. any person, company or other body corporate. Not more
than four persons shall be registered as
joint-holders of any share.
(15)[Share Certificates. ARTICLE 17A - Subject to the provisions of Articles
17B and 17C every person whose name is entered as a
member in the register shall, without payment, be
entitled to a certificate or more certificates in
marketable lot under the common seal of the company
specifying the share or shares held by him and the
amount paid thereon. Provided that, in respect of a
share
- -----------------
(14) Amended vide Special Resolution passed by the shareholders at 6th AGM
held on 29 September 1992.
18
[VSNL COMPANY LOGO] Videsh Sanchar Nigam Limited Articles of Association
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or shares held jointly by several persons, the
Company shall not be bound to issue more than one
certificate and delivery of a certificate for a share
to one of several joint holders shall be sufficient
delivery to all.
17B - Save as herein otherwise provided, the Company
shall be entitled to treat the person whose name
appears on the Register of Members as holder of any
share or whose name appears as the beneficial owner
of shares in the records of the Depository as the
absolute owner thereof and accordingly shall not
(except as ordered by a Court of competent
jurisdiction or as by law required) be bound to
recognise any benami trust or equity or equitable,
contingent or other claim or interest in such share
on the part of any other person whether or not it,
shall have express or implied notice thereof.
17C - Notwithstanding anything contained herein, the
Company shall be entitled to dematerialise pursuant
to the provisions of the Depositories Act, 1996 its
shares debentures and other securities for
subscription in a dematerialised form. The Company
shall further be entitled to maintain a Register of
Members with the details of Members holding shares
both in material and dematerialised form in any media
as permitted by law including any form of electronic
media.]
Issue of new share ARTICLE 18 - If a share certificate is worn out,
certificate(s) in place defaced, lost, or destroyed, it may be renewed in
of worn out, defaced, accordance with the Share Certificate Rules under
lost, or destroyed. the Act on payment of fee not exceeding Rupee one and
on such terms, if any, as to evidence and indemnity
and the payment of out-of-pocket expenses incurred by
the Company in investigating evidence as the Board
may think fit.
CALL ON SHARES
Board of Directors ARTICLE 19 - (1) The Board of Directors, may from
to make calls. time to time, by a resolution passed at a meeting of
the Board (and not by a resolution by circulation)
make such call as it thinks fit upon the members in
respect of moneys unpaid on the shares held by them
respectively, by giving not less than 15 days notice
for payment and each member shall pay the amount of
every call so made on him to the persons and at the
times and places appointed by the Board of Directors.
A call may be made payable by instalments. The Board
may, at their discretion, extend the time for payment
of such calls.
Calls to carry (2) If any member fails to pay any call due from him
interest. on the day appointed for payment thereof or any such
extension thereof as aforesaid, he shall be liable to
pay interest on the same from the day appointed for
the payment thereof to the time of
- ------------------
(15) Amended vide Special Resolution passed by the shareholders at 12th AGM
held at 21 September 1998.
19
[VSNL COMPANY LOGO] Videsh Sanchar Nigam Limited Articles of Association
- -------------------------------------------------------------------------------
actual payment, at such rate as shall from time to
time be fixed by the Board of Directors, but nothing
in this Article shall render it compulsory for the
Board of Directors to demand or recover any interest
from any such member.
Sums payable on ARTICLE 20 - (1) Any sum which by the terms of issue
allotment or at fixed of a share becomes payable on allotment or at any
date to be paid on fixed date, whether on account of the nominal value
due dates. of the share or by way of premium, shall for the
purposes of these regulations be deemed to be a call
duly made and payable on the date on which by the
terms of issue such sum becomes payable.
Voluntary advances of (2) (a) The Board may, if it thinks fit, receive from
uncalled share capital. any member willing to advance the same, all or any
part of the moneys uncalled and unpaid upon any
shares held by him.
(16)[Interest payable (2) (b) Upon all or any of the moneys so advanced
on calls in advance. may, until the same would, but for such advance,
become presently payable, pay interest at such rate
not exceeding, unless the Company in general meeting
shall otherwise direct, six percent per annum as may
be agreed upon between the Board and the member
paying the sum in advance and the Board of Directors
may, at any time, repay the amount so advanced upon
giving to such members three months notice in
writing. Moneys paid in advance of calls shall not in
respect thereof confer a right to dividend or to
participate in the profits of the Company.]
Calls to date from ARTICLE 21 - A call shall be deemed to have been made
resolution. at the time when the resolution authorising such call
was passed at a meeting of the Board of Directors.
Forfeiture of shares. ARTICLE 22 - (1) If a member fails to pay any call,
or installment of a call, on the day appointed for
payment thereof, the Board may, at any time
thereafter during such time as any part of the call
or installment remains unpaid, serve a notice on him
requiring payment of so much of the call or
installment as is unpaid together with any interest
which may have accrued.
(2) The notice aforesaid shall :
(a) name a further day (not being earlier
than the expiry of fourteen days from the
date of service of the notice) on or before
which the payment required by the notice is
to be made; and,
(b) state that, in the event of non-payment
on or before the day so named, the shares in
respect of which the call was made will be
liable to be forfeited.
- -----------------
(16) Amended vide Special Resolution passed by the shareholders at 6th AGM
held on 29 September 1992.
20
[VSNL COMPANY LOGO] Videsh Sanchar Nigam Limited Articles of Association
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(3) If the requirements of any such notice as
aforesaid are not complied with, any share in respect
of which the notice has been given may, at any time
thereafter before the payment required by the notice
has been made, be forfeited by a resolution of the
Board to that effect.
(4) A forfeited share may be sold or otherwise
disposed of on such terms and in such manner as the
Board thinks fit.
(5) At any time before a sale or disposal as
aforesaid, the Board may cancel the forfeiture on
such terms as it thinks fit.
Liability to pay money ARTICLE 23 - (1) A person whose shares have been
owing at the time of forfeited shall cease to be a member in respect of
forfeiture. the forfeited shares, but shall, notwithstanding the
forfeiture, remain liable to pay to the Company all
moneys which at the date of forfeiture, were
presently payable by him to the Company in respect of
the shares.
(2) The liability of such persons shall cease if and
when the Company shall have received payment in full
of all such moneys in respect of the shares.
Declaration of ARTICLE 24 - (1) A duly verified declaration in
forfeiture. writing that the declarant is a Director, the Manager
or the Secretary, of the Company, and that a share in
the Company has been duly forfeited on a date stated
in the declaration, shall be conclusive evidence of
the facts therein stated as against all persons
claiming to be entitled to the share.
(2) The Company may receive the consideration, if
any, given for the share on any sale or disposal
thereof and may execute a transfer of the share in
favour of the person to whom the share is sold or
disposed of.
(3) The transferee shall thereupon be registered as
the holder of the share.
(4) The transferee shall not be bound to see to the
application of the purchase money, if any, nor shall
his title to the share, be affected by any
irregularity or invalidity in the proceedings in
reference to or disposal of the share.
Provisions regarding ARTICLE 25 - The provisions of these Articles as to
forfeiture to apply forfeiture shall apply in the case of non-payment of
in the case of any sum which by terms of issue of a share, becomes
non-payment of sums payable at a fixed time, whether on account of the
payable at a fixed nominal value of the shares or by way of premium,
time. as if the same had been payable by virtue of a call
duly made and noticed.
(17)[Company's lien ARTICLE 26 - The Company shall have a first and
on shares. paramount lien upon every share not being fully paid
up, registered in the
- -----------------
(17) Amended vide Special Resolution passed by the shareholders at 6th AGM
held on 29 September 1992.
21
[VSNL COMPANY LOGO] Videsh Sanchar Nigam Limited Articles of Association
- -------------------------------------------------------------------------------
name of each member (whether solely or jointly with
others), and upon the proceeds of sale thereof for
moneys called or payable at a fixed time in respect
of such shares whether the time for the payment
thereof shall have actually arrived or not and no
equitable interest in any share shall be created
except upon the footing and condition that this
Article is to have full effect. Such lien shall
extend to all dividends and bonuses from time to time
declared in respect of such shares. Unless otherwise
agreed, the registration of a transfer of a share
shall operate as a waiver of the Company's lien, if
any, on such shares.]
Enforcement of lien ARTICLE 27 - The Company may sell, in such manner as
on sale of shares. the Board thinks fit, any shares on which the Company
has lien, but no sale shall be made unless a sum in
respect of which the lien exists is presently payable
or until the expiration of fourteen days after a
notice in writing stating and demanding payment of
such part of amount in respect of which lien exists
as is presently payable, has been given to the
registered holder for the time being of the share, or
the person entitled thereto by reason of his death or
insolvency.
Application of ARTICLE 28 - The proceeds of the sale shall be
proceeds of sales. received by the Company and shall be applied in
payment of such part of the amount in respect of
which lien exists as is presently payable and the
residue shall (subject to a like lien for sums not
presently payable as existed upon the shares prior to
the sale) be paid to the persons entitled to the
shares at the date of the sale. The purchaser shall
be registered as the holder of the share and he shall
not be bound to see to the application of the
purchase money, nor shall his title to the shares be
affected by any irregularity or invalidity in the
proceedings in reference to the sale.
Transfer and ARTICLE 29 - Subject to the provisions of Article 3,
transmission of the right of members to transfer their shares shall
shares. be restricted as follows:
(18)[(a) A share may be transferred by a member or
other person entitled to transfer to a person
approved by the Board.]
(b) Subject to the Act and subject as aforesaid, the
Board may, in their absolute and uncontrolled
discretion, refuse to register any proposed transfer
of shares.
(19)[(c) If the Board refuse to register transfer of
any shares, the Board shall, within one month of the
date on which the instrument of transfer is delivered
to the Company, send to the transferee and the
transferor notice of the refusal. Provided that
registration of a transfer shall not be refused on
the
- -----------------
(18) Amended vide Special Resolution passed by the shareholders at 6th AGM
held on 29 September 1992.
(19) Amended vide Special Resolution passed by the shareholders at 6th AGM
held on 29 September 1992.
22
[VSNL COMPANY LOGO] Videsh Sanchar Nigam Limited Articles of Association
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ground of the transferor being either alone or
jointly with any other person or persons indebted to
the company on any account whatsoever except a lien
on the shares.]
(d) Subject to the provisions of the Act and save as
herein otherwise provided, the Board shall be
entitled to treat the person whose name appears on
the register of members as the holder of any share as
the absolute owner thereof and accordingly shall not
(except as ordered by court of competent jurisdiction
or as by law required) be bound to recognise any
benami, trust or equity or equitable contingent or
other claim to or interest in such share on the part
of any person whether or not it shall have express or
implied notice thereof.
(20)[Transmission by (e) In the case of transfer of shares or other
operation of law. marketable securities where the company has not
issued any certificates and where such shares or
securities are being held in an electronic and
fungible form the provisions of the Depositories Act,
1996 shall apply.]
Execution of transfer. ARTICLE 30 - The instrument of transfer of any share
in the Company shall be executed both by the
transferor and transferee and the transferor shall be
deemed to remain holder of the share until the name
of the transferee is entered in the register of
members in respect thereof.
Register of transfers. ARTICLE 31 - The Company shall keep a book, to be
called the "Register of Transfers" and therein shall
be fairly and distinctly entered particulars of every
transfer or transmission of any share.
Instrument of transfer ARTICLE 32 - Every instrument of transfer shall be
to be left at office delivered to the Company at the office for
and evidence of titles registration accompanied by any certificate of the
to be given. shares to be transferred and such evidence as the
Company may require to prove the title of the
transferor, or his right to transfer the shares. All
instruments of transfer shall be retained by the
Company, but any instrument of transfer which the
Board may decline to register shall on demand, be
returned to the person depositing the same.
(21)[Form of transfer. ARTICLE 33 - The instrument of transfer shall be in
writing and all the provisions of Section 108 of the
Companies Act and of any statutory modification
thereof for the time being shall be duly complied
with in respect of all transfers of shares and
registration thereof.]
Closing of Registers ARTICLE 34 - The Register of Members or the Register
of members and of Debenture holders may be closed for any period or
Debenture holders. periods not exceeding 45 (forty five) days in each
year but not
- -----------------
(20) Amended vide Special Resolution passed by the shareholders at 12th AGM
held on 21 September 1996.
(21) Amended vide Special Resolution passed by the shareholders at 6th AGM
held on 29 September 1992.
23
[VSNL COMPANY LOGO] Videsh Sanchar Nigam Limited Articles of Association
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exceeding 30 (thirty) days at any onetime after
giving not less than 7 (seven) days previous notice
by advertisement in some newspaper circulating in the
district in which the registered office of the
Company is situated.
ARTICLE 35 - deleted vide Special Resolution passed
by the Shareholders at 6th AGM held on 29 September
1992.
Board's right to ARTICLE 36 - The Board shall have the right to refuse
refuse registration. to register a person entitled by transmission to any
shares or his nominee, as if he were the transferee
named in an ordinary transfer presented for
registration.
(22)[How far new ARTICLE 37 - Except so far as otherwise provided by
shares to rank with the conditions of issue, or by these Articles, any
share in original capital raised by the creation of new shares shall be
capital. considered part of the original capital and shall be
subject to the provisions herein contained with
reference to the payment of calls and instalments,
transfer and transmission, lien, voting, surrender
and otherwise. Such new shares shall rank pari passu
with the existing Shares in all respects except for
the purposes of dividend that shall be pro rated to
the period for which such newly issued shares are in
existence.
New Shares to be ARTICLE 38(a) - If the Board, in exercise of good
offered to Members. faith and in its reasonable judgement, determines
that the Company requires additional funds, the Board
may request, by issuance of a notice (the "Funding
Notice") to All Shareholders of the Company, to
contribute, within 90 Business Days after the
issuance of the Funding Notice (the "Funding
Period"), additional capital to the Company, on a pro
rated basis depending upon the number of voting
shares of the Company then held by such shareholders,
by way of subscription for additional voting equity
shares in accordance with Section 81(1) of the Act or
provide a loan to the Company, all as determined by
the Board and set forth in the Funding Notice.
(b) If additional capital is to be contributed
pursuant to Article 38(a) by way of subscription for
additional voting equity shares of the Company, then
the subscription price for each such additional
voting equity share shall be determined by the Board
and set out in the Funding Notice. The Company shall,
promptly upon the receipt of such subscription
amount, issue to All Shareholders the appropriate
number of voting equity shares based upon the payment
received from each such shareholder.
(c) If any offer to subscribe for voting equity
shares of the Company pursuant to Article 38(a) (such
offer, the "Right") includes a right to renounce the
Right in favour of any other
- -----------------
(22) Amended vide Special Resolution passed by the shareholders at 16th AGM
held on 20 August 2002.
24
[VSNL COMPANY LOGO] Videsh Sanchar Nigam Limited Articles of Association
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Person, then, no Shareholder shall renounce such
Right in favour of any other Person (other than an
Affiliate of the renouncing Shareholder) without
first giving the other Shareholder a reasonable
opportunity to acquire such Right, either directly or
through its nominees on the same terms and conditions
that such Right is proposed to be renounced in favour
of any other Person (other than an Affiliate of the
renouncing Shareholder).]
BORROWING POWERS
Power of borrowing. ARTICLE 39 - (1) Subject to the provisions of
Sections 292 and 293 (1) (d) of the Act, the Board
may by means of a resolution passed at a meeting of
the Board from time to time, borrow and/or secure the
payment of any sum or sums of money for the purposes
of the Company.
Conditions on which (2) The Board may secure the repayment of such moneys
money may be in such manner and upon such terms and conditions in
borrowed. all respects as they think fit and in particular by
the issue of bonds, perpetual or redeemable
debentures, or debenture - stock or any mortgage,
charge or other security on the undertaking of the
whole or any part of the property of the Company
(both present and future) including its uncalled
capital for the time being.
How debentures etc. (3) Debentures, bonds etc. of the Company shall be
shall be transferred. transferred or transmitted in accordance with the
procedure prescribed for shares in Section 108 of the
Companies Act and the prevailing rules made
thereunder by Central Government from time to time,
unless different provisions are made specifically in
the terms of issue governing such debentures, bonds
etc.
Securities may be ARTICLE 40 - Debentures, debenture stock, bonds or
assignable free from other securities may be made assignable free from any
equities. equities between the company and the person to whom
the same may be issued.
(23)[Issue at discount ARTICLE 41 - Subject to Sections 79 and 117 of the
etc. or with special Act, any debentures, debenture stock, bonds or other
privileges. securities may be issued at a discount, premium or
otherwise, and with any special privileges to
redemption, surrender, drawings, allotment of shares,
appointment of Directors and otherwise. Debentures,
Debenture-Stock, Bonds or other securities with the
right to allotment of or conversion into shares shall
be issued only with the consent of the company in
General Meeting.]
- -----------------
(23) Amended vide Special Resolution passed by the shareholders at 6th AGM
held on 29 September 1992.
(24) Amended vide Special Resolution passed by the shareholders at 16th AGM
held on 20 August 2002.
25
[VSNL COMPANY LOGO] Videsh Sanchar Nigam Limited Articles of Association
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Inviting/accepting ARTICLE 42 - Subject to the provisions of Sections
deposits. 58A and 58B, 292 and 293 of the Companies Act and
the rules made thereunder from time to time, the
Board of Directors may, from time to time, invite
and/or accept deposits from members of the public
and/or employees of the Company/or otherwise at such
interest rates as may be decided by the Board. Board
may also pay commission to any person for subscribing
or agreeing to subscribe or procure or agree to
procure these deposits.
GENERAL MEETINGS
Notice of General ARTICLE 43 - (1) A general meeting of the Company may
Meeting. be called by giving not less than twenty one days
notice in writing.
(2) A general meeting may be called after giving
shorter notice than that specified in clause (1) of
this Article if consent is accorded thereto :
(i) in the case of an annual general
meeting, by all the members entitled to vote
thereat; and,
(ii) in the case of any other meeting
subject to the provisions of Section 171 of
the Act, by members of the Company holding
not less than ninety five percent of such
part of the paid-up sharecapital of the
Company as gives a right to vote at meeting.
Business of meeting. ARTICLE 44 - The ordinary business of an annual
general meeting shall be to receive and consider the
profit and loss account, the balance sheet, and the
report of the Board of Directors and of the Auditors,
and to declare dividends. All other business
transacted at such meeting and all business
transacted at an extra ordinary meeting shall be
deemed special.
(24)[Quorum. ARTICLE 45 - (1) No business shall be transacted at
any general meeting unless a quorum of members is
present at the time when the meeting proceeds to
business.
(2) The quorum requirement for the general meeting of
the Company shall be governed by the provisions of
the Act.
(3) Notwithstanding the provisions of Article 45(2),
at least one authorised representative each of the
Government and the Strategic Partner, in case of a
general meeting, shall be necessary to constitute
quorum for any meeting in which a resolution for any
of the matters specified in Article 69(2) is to
- -----------------
(24) Amended vide Special Resolution passed by the shareholders at 16th AGM
held on 20 August 2002.
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be passed and a notice of not less than 21 (twenty
one) days shall be given to the Government and the
Strategic Partner for any such meeting.]
General Meetings. ARTICLE 46 - The first annual general meeting of the
Company shall be held within eighteen months of its
incorporation and thereafter, the annual general
meeting shall be held within six months after the
expiry of each financial year, except in the case
when, for any special reason time for holding any
annual general meeting (not being the first annual
general meeting) is extended by the Registrar under
Section 166 of the Act, no greater interval than
fifteen months shall be allowed to elapse between the
date of one annual general meeting and that of the
next. Every annual general meeting shall be held
during business hours on a day other than a public
holiday either at the registered office of the
company or at some other place as the Central
Government may direct, and the notice calling the
meeting shall specify it as the annual general
meeting. All other meetings of the Company shall be
called "Extraordinary General Meeting".
When Extra-ordinary ARTICLE 47 - The Board may, whenever they think fit
meeting to be called. and shall, on the requisition of the holders of not
less than one tenth of the paid-up-capital of the
Company upon which all calls or other sums then due
have been paid, as at the date carry the right of
voting in regard to that matter forthwith proceed to
convene an extraordinary meeting of the Company, and
in the case of such requisition, the following
provisions shall have effect :
(1) The requisition must state the objects of the
meeting and must be signed by the requisitionists and
deposited at the office and may consist of several
documents, in like-form each signed by one or more
requisitionists.
(2) If the Board of Directors of the Company do not
proceed within twenty one days from the date of the
requisition being so deposited to cause meeting to be
called on a day not later than 45 days from the date
of deposit of the requisition, the requisitionists or
a majority of them in value may themselves convene
the meeting, but any meeting so convened shall be
held within three months from the date of the
deposits of the requisition.
(3) Any meeting convened under this Article by the
requisitionists shall be convened in the same manner
as nearly as possible as that in which meetings are
to be convened by the Board.
If, after a requisition has been received, it is not
possible for a sufficient number of Directors to meet
in time so as to form a quorum, any Director may
convene an extraordinary general meeting in the same
manner as early as possible as that in which meetings
may be convened by the Board.
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Omission to give ARTICLE 48 - The accidental omission to give any such
notice. notice or the non-receipt of any such notice by any
member shall not invalidate the proceedings at any
meeting.
Chairman of General ARTICLE 49 - The Chairman of the Board shall be
Meeting. entitled to take the Chair at every general meeting
or if there be no such Chairman, or if at any meeting
he shall not be present within fifteen minutes after
the time appointed for holding such meeting or is
unwilling to act as Chairman, the members present
shall choose another Director as Chairman, and, if no
Director shall be present, or if all the Directors
present decline to take the chair then, the members
present shall choose one of their number to be the
Chairman.
(25)[When, if quorum ARTICLE 50 - (1) If within half an hour from the time
not present, meetings appointed for the meeting a quorum is not present,
to be dissolved and the meeting if convened upon such requisition as
when to be adjourned. aforesaid, shall be dissolved.
(2) In the event that no authorised representative of
either the Government or the Strategic Partner is
present at a meeting referred to in Article 45(3)
above, such meeting shall stand adjourned to the same
day in the next week, at the same time and place, or
to such later day as may be notified to the
Government or the Strategic Partner as the case may
be.
(3) In the event that no authorised representative of
the same Shareholder, whose authorised representative
was not present in the meeting referred to in Article
45(3), is present at the adjourned meeting referred
to in Article 50(2) above, such meeting shall stand
adjourned to the same day in the next week, at the
same time and place, or to such later day as may be
notified to such Shareholder.
(4) Notwithstanding anything to the contrary in
Article 45(3) above, in the event that no authorised
representative of the same Shareholder, whose
authorised representative was not present in the
meetings referred to in Articles 45(3) and 50(2), is
present at the adjourned meeting referred to in
Article 50(3), it shall be deemed that the presence
of the authorised representatives of such Shareholder
is not required for such meeting and the shareholders
present at such adjourned general meeting shall be
entitled to proceed with the items on the agenda in
such manner as they deem fit even though such items
may be relating to matters listed in Article 69(2).]
Right of President to ARTICLE 51 - (1) The President, so long as he is a
appoint any person as shareholder of the Company, may, from time to time,
his representative. appoint one or more persons (who need not be a member
or members of the Company) to represent him at all or
any meeting of the
- -----------------
(25) Amended vide Special Resolution passed by the shareholders at 16th AGM
held on 20 August 2002.
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Company.
(2) Any one of the persons appointed under sub clause
(1) of this Article shall be deemed to be a member of
the Company and shall be entitled to vote and be
present in person and exercise the same rights and
powers (including the right to vote by proxy) as the
President could exercise as a member of the Company.
(3) The President may, from time to time, cancel any
appointment made under sub clause (1) of this Article
and make fresh appointment.
(4) The production at the meeting of an order of the
President evidenced as provided in the Constitution,
shall be accepted by the Company as sufficient
evidence of any such appointment or cancellation as
aforesaid.
Adjournment of ARTICLE 52 - (1) The Chairman may, with the consent
meeting. of any meeting at which a quorum is present and
shall, if so directed by the meeting, adjourn the
meeting from time to time and place to place.
Business at adjourned (2) No business shall be transacted at any adjourned
meeting. meeting other than the business left unfinished at
the meeting from which the adjournment took place.
Notice of adjourned (3) When a meeting is adjourned for 30 days or more,
meeting. notice of the adjourned meeting shall be given as was
given in the case of an original meeting.
(4) Save as aforesaid, it shall not be necessary to
give any notice of an adjournment or of the business
to be transacted at an adjourned meeting.
(26)[How questions ARTICLE 53 - (1) Every question submitted to a
to be decided at meeting shall be decided in the first instance by a
meetings. show of hands.]
- -----------------
(26) Amended vide Special Resolution passed by the shareholders at 16th AGM
held on 20 August 2002.
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Evidence of a (2) At any general meeting a resolution put to vote
resolution where poll of the meeting shall be decided on a show of hands,
not demanded. unless a poll is, before or on the declaration of the
result of the show of hands, demanded by a member
present in person or proxy or by duly authorised
representative, and unless a poll is so demanded, a
declaration by the Chairman that a resolution has, on
a show of hands, been carried or carried unanimously
or by a particular majority or lost, and an entry to
that effect in the book of proceedings of the
Company, shall be conclusive evidence of the fact,
without proof of the number or proportion of the vote
recorded in favour of or against that resolution.
Poll how to be taken. (3) If a poll is duly demanded, it shall be taken in
such manner and at such time and place as the
Chairman of the meeting directs and either at once or
after an interval or adjournment or otherwise, and
the result of the poll shall be deemed to be the
resolution of the meeting at which the poll was
demanded. The demand of a poll may be withdrawn.
Poll when to be taken (4) Subject to the provisions of Section 180 of the
at the meeting. Act, any poll duly demanded on the election of a
Chairman of a meeting or on any question of
adjournment shall be taken at the meeting and without
adjournment.
Business may proceed (5) The demand of a poll shall not prevent the
notwithstanding continuance of a meeting for the transaction of any
demand of poll. business other than the question on which a poll has
been demanded.
Chairman's decision (6) The Chairman of any meeting shall be the sole
conclusive. judge of the validity of every vote tendered at such
meeting. The Chairman present at the taking of a poll
shall be the sole judge of the validity of every vote
tendered at such poll.
Objection to vote. (7) No objection shall be raised as to the
qualification of any voter except at the meeting or
adjourned meeting at which the vote objected to is
given or tendered and every vote not disallowed at
such meeting shall be valid for all other purposes.
Chairman to judge (8) Any such objection made in due time shall be
validity. referred to the Chairman of the meeting whose
decision shall be final and conclusive.
Vote of Members. ARTICLE 54 - Upon a show of hands every member
present in person or by proxy, or by duly authorised
representative shall have one vote and upon a poll
every such member shall have one vote for every share
held by him.
Votes in respect of ARTICLE 55 - Any person entitled under the
deceased and transmission clause to any shares may vote at any
bankrupt members. general meeting in respect thereof in the same manner
as if he were the registered holder of such shares
provided that seventy-two hours at least before the
time of holding the meeting or adjourned meeting as
the case may be at which he proposes to vote, he
shall satisfy the
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Board of Directors of his right to such shares,
unless the Board of Directors shall have previously
admitted his right to such shares of his right to
vote at such meeting in respect thereof.
Joint holders. ARTICLE 56 - Where there are joint registered holders
of any share, any one of such persons may vote at any
meeting, either personally or by proxy, in respect of
such shares as if he were solely entitled thereto,
and if more than one of such joint holders be present
at any meeting personally or by proxy, that one of
the said persons present whose name stands first on
the register in respect of such share shall alone be
entitled to vote in respect thereof. Several
executors or administrators of a deceased member in
whose name any share stands shall for the purposes of
this clause be deemed joint holders thereof.
Votes in respect of ARTICLE 57 - A member of unsound mind or in respect
shares of members of of whom an order has been made by any Court having
unsound mind. jurisdiction in lunacy, may vote whether on a show of
hands or on poll, by his committee or other legal
guardian, and any such committee or guardian may on a
poll, vote by proxy.
No member to vote ARTICLE 58 - No member shall be entitled to vote at
unless calls are paid- any general meeting unless all calls or other sums
up. presently payable by him in respect of shares in the
Company have been paid.
Instrument appointing ARTICLE 59 - A member entitled to attend and vote at
proxy to be in writing. a meeting may appoint another person (whether a
member or not) as his proxy to attend a meeting and
vote on show of hands or on a poll. No member shall
appoint more than one proxy to attend on the same
occasion. The instrument appointing a proxy shall be
in writing and be signed by the appointer or his
attorney duly authorised in writing or if the
appointer is a body corporate, be under its seal or
be signed by an officer or an attorney duly
authorised by it.
Form of Proxy. ARTICLE 60 - An instrument appointing a proxy shall
be in either of the forms in Schedule IX to the Act
or a form as near thereto as circumstances admit.
Instrument appointing ARTICLE 61 - The instrument appointing a proxy and
proxy to be deposited the power of attorney or other authority (if any)
in office. under which it is signed, or a notarially
certified copy of that power or authority, shall be
deposited at the registered office of the Company not
less than 48 (forty-eight) hours before the time for
holding the meeting or adjourned meeting at which the
person named in the instrument proposes to vote, or
in the case of a poll not less than 24 (twenty four)
hours before the time appointed for taking of the
poll and in default the instrument of proxy shall not
be treated as valid.
When vote by proxy ARTICLE 62 - A vote given in accordance with the
valid though authority terms of an instrument of proxy shall be valid
revoked. notwithstanding the previous death or insanity of the
principal, or the revocation of the proxy or of the
authority under which the proxy was executed or the
transfer of the shares in respect of which the proxy
is given
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provided that no intimation in writing of such death,
insanity, revocation or transfer or transmission
shall have been received at the office of the Company
before the commencement of the meeting or adjourned
meeting at which the proxy is used.
No member entitled ARTICLE 63 - No member shall be entitled to be
to vote etc. while present, or to vote on any question either personally
call due to the or by proxy at any general meeting or upon a poll, or
company. be reckoned in a quorum whilst any call or other sum
shall be due and payable to the Company in respect of
any of the share of such members.
BOARD OF DIRECTORS
Board of Directors. ARTICLE 64 - The business of the Company shall be
managed by the Board of Directors.
(27)(28)[Number ARTICLE 65 - (1) Until otherwise determined by a
of Directors. General Meeting of the Company and subject to the
provisions of Section 252 of the Act, the Board shall
comprise of twelve Directors. The Directors are not
required to hold any qualification shares.
(2) As long as the Government holds at least 10% of
the voting equity share capital of the Company the
composition of the Board shall be as under:
(i) Four out of twelve directors shall be
permanent or non-retiring directors, of
which the Government and the Strategic
Partner shall be entitled to appoint two
directors each.
(ii) The balance eight directors shall be
liable to retire by rotation. Of the
retiring directors, four directors shall be
independent directors on the Board.
(iii) Of the four independent directors the
Strategic Partner and the Government shall
be entitled to nominate and recommend names
of two independent directors each.
(iv) The composition of the balance four
directors i.e. the retiring and non
independent directors shall be as under:
iv.i As long as the Strategic
Partner together with its
Affiliates holds 25% of the voting
equity share capital of the
Company, two directors shall be
- -----------------
(27) Articles 65 to 66L amended vide Special Resolution passed by the
shareholders at EGM held on 10 March 1993.
(28) Modified vide Special Resolution passed by the shareholders at 16th AGM
held on 20 August 2002.
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nominated each by the Government
and the Strategic Partner.
iv.ii As soon as the Strategic
Partner acquires and holds more
than 25% but less than 30% of the
voting equity share capital of the
Company, the Strategic Partner
shall have the right to appoint
three directors on the Board and
the Government shall have the right
to appoint one Director on the
Board.
iv.iii As soon as the Strategic
Partner acquires and holds more
than 30% of the voting equity share
capital of the Company, the
Strategic Partner shall have the
right to appoint all the four
directors.
(3) Notwithstanding anything to the contrary herein
(i) the Government shall have the right to appoint
two non retiring Directors so long as the Government
holds at least 10% of the voting equity share capital
of the Company, and (ii) the Government shall be
entitled to appoint one non retiring director on the
Board so long as the Government is a shareholder in
the Company.
(4) Notwithstanding the foregoing, at least
three-fourths of the total number of directors on the
Board shall, at all times, be Indian Nationals.
(5) For purposes of clarity and avoidance of doubt,
the Government and the Strategic Partner agree that
if additional independent directors are required to
be appointed to the Board to comply with any Laws or
regulation or to comply with the provisions of any
listing agreement, then, by mutual agreement between
the Government and the Strategic Partner, either the
strength of the Board shall be increased to the
extent required or the number of directors that each
of the Government and the Strategic Partner shall be
entitled to appoint shall be proportionately
reduced.]
(29)[Appointment of ARTICLE 66A - The Board may appoint an alternate
alternate Director. Director recommended for such appointment by a
Director other than whole-time Director (hereinafter
called the Original Director) in whose place he is
being appointed during his absence for a period of
not less than three months from the State in which
the meetings of the Board are ordinarily held. An
alternate Director appointed under this Article shall
not hold office for a period longer than that
permissible to the Original Director in whose place
he has been appointed and shall vacate office if and
when the original Director returns to that State. If
the term
- -----------------
(29) Article 66A & 66B deleted and Article 66C to 66L suitably renumbered
and renumbered Article 66A modified vide Special Resolution passed by
the shareholders at 16th AGM held on 20 August 2002.
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of office of the Original Director is determined
before he so returns to that State, any provision(s)
in the Act or in this Articles for the automatic
appointment shall apply to the Original Director and
not to the alternate Director.]
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Directors' power to ARTICLE 66B - Subject to the provisions of Section
appoint additional 260 of the Act, the Board shall have power at any
Director. time and from time to time, appoint any other
qualified person(s) to be an Additional Director(s),
but so that the total number of Directors shall not
at any time exceed the maximum fixed under Article
65. Any such additional Director(s) shall hold
office only upto the date of the next Annual General
Meeting.
Directors power to fill Article 66C - (A) IF THE OFFICE OF ANY DIRECTOR
casual vacancies. APPOINTED BY THE COMPANY IN GENERAL MEETING IS
VACATED BEFORE HIS TERM OF OFFICE WILL EXPIRE IN THE
NORMAL COURSE, THE RESULTING CASUAL VACANCY MAY, IN
DEFAULT OF AND SUBJECT TO THESE ARTICLES, BE FILLED
BY THE BOARD OF DIRECTORS AT A MEETING OF THE BOARD.
(b) Any person so appointed shall hold office only
upto the date upto which the Director in whose place
he is appointed would have held office, if it had not
been vacated as aforesaid but shall be eligible for
the re-appointment at such Meeting subject to the
provisions of the Act.
Retirement by rotation ARTICLE 66D - At every Annual General Meeting of the
of Directors and Company, one-third of such of the Directors for the
ascertaining of time being, as are liable to retire by rotation or if
Directors retiring by their number is not three or a multiple of three, the
rotation filling up number nearest to one-third and shall retire from
of vacancies. office. The non-retiring Directors, if any, shall not
be subject to retirement under this clause and shall
not be taken into account in determining the rotation
of retirement or the number of Directors to retire.
Subject to provisions of the Act, the Directors to
retire by rotation under this Article at every Annual
General Meeting shall be those who have been longest
in office since their last appointment, but as
between persons who become Directors on the same day,
those who are to retire, shall, in default of and
subject to any agreement among themselves, be
determined by lot.
Eligibility for re- ARTICLE 66E - A retiring Director shall be eligible
election. for re-election.
Company to appoint ARTICLE 66F - Subject to Section 258 of the Act, the
successors. Company at the General Meeting at which a Director
retires in the manner aforesaid may fill up the
vacated office by electing a person thereto.
(30)[Special position ARTICLE 66G - As long as the Strategic Partner holds
of Managing Director. 25% of the then-outstanding Equity Shares, one of the
director nominated by the Strategic Partner shall be
the Managing Director of the Company. The Managing
Director shall not, while he continues to hold that
office be subject to retirement
- -----------------
(30) Amended vide Special Resolution passed by the shareholders at 16th AGM
held on 20 August 2002.
35
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by rotation in accordance with Article 66 D. If he
otherwise, ceases to hold the office of Director he
shall ipso facto and immediately cease to be a
Managing Director.]
Notice of candidature Article 66H - (A) A PERSON OTHER THAN A RETIRING
for office of Director DIRECTOR SHALL BE ELIGIBLE FOR APPOINTMENT TO THE
except in certain cases. OFFICE OF DIRECTOR AT ANY GENERAL MEETING, IF HE OR
SOME MEMBER INTENDING TO PROPOSE HIM HAS, NOT LESS
THAN FOURTEEN DAYS BEFORE THE MEETING, LEFT AT THE
REGISTERED OFFICE, A NOTICE IN WRITING UNDER HIS
HAND, SIGNIFYING HIS CANDIDATURE FOR THE OFFICE OF
DIRECTOR OR THE INTENTION OF SUCH MEMBER TO PROPOSE
HIM AS A CANDIDATE FOR THAT OFFICE, AS THE CASE MAY
BE, ALONG WITH A DEPOSIT OF FIVE HUNDRED RUPEES OR
SUCH SUM AS MAY FOR THE TIME BEING BE PRESCRIBED BY
THE ACT, WHICH SHALL BE REFUNDED TO SUCH PERSON OR,
AS THE CASE MAY BE, TO SUCH MEMBER, IF THE PERSON
SUCCEEDS IN GETTING ELECTED AS A DIRECTOR.
(b) The Company shall inform its members of the
candidature of a person for the office of a Director
or the intention of a member to propose such person
as a candidate for that office, by serving individual
notices on the members not less than seven days
before the Meeting;
Provided that it shall not be necessary for the
Company to serve individual notices upon the members
as aforesaid, if the Company advertises such
candidature or intention, not less than seven days
before the Meeting, in at least two newspapers
circulating in the place where the Registered Office
of the Company is located, of which one is published
in English and the other in the regional language of
that place.
(c) Every person (other than a Director retiring by
rotation or otherwise or a person who has left at the
office of the Company, a notice under Section 257 of
the Act, signifying his candidature for the office of
Director) proposed as a candidate for the office of a
Director shall sign and file with the Company his
consent in writing to act as a Director, if
appointed.
Filing of consent to ARTICLE 66 I - A person other than
act as Director.
(a) a Director re-appointed after retirement by
rotation or immediately on the expiry of his term of
office; or
(b) an additional or alternate Director, or a person
filling a casual vacancy in the office of a Director
under Section 262 of the Act, appointed as an
additional or alternate Director, immediately on the
expiry of his term of office;
shall not act as a Director of the Company, unless he
has, within thirty days of his appointment, signed
and filed with the Registrar his consent in writing
to act as such Director.
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Remuneration of ARTICLE 66 J - (a) The fee payable to a
Directors. Director for attending a meeting of the
Board or Committee thereof shall be decided
by the Board of Directors from time to time
within the maximum limit of such fee that
may be prescribed under the proviso to
Section 310 of the Companies Act, 1956.
(b) Subject to the Provisions of the Act,
any Director if called upon to perform extra
services or special exertions or efforts
(which expression shall include work done by
a Director as a member of any committee
formed by the Directors), the board may
arrange with such Director for such special
remuneration, for such extra services or
special exertions or efforts, either by a
fixed sum or otherwise, as may be determined
by the Board and such remuneration may be
either in addition to or in substitution of
his remuneration above provided.
Travelling expenses ARTICLE 66 K - The Board of Directors may
incurred by Director. allow and pay to any Director, who is not a
resident of the place where the meetings of
the Board or Committees thereof or General
Meeting of the Company are held and who
shall come to such place for the purpose of
attending a meeting or for attending its
business at the request of the Company, such
sum as the Board may consider fair
compensation for travelling, hotel and other
incidental expenses, in addition to his fee,
if any, for attending such meeting as above
specified, and if any Director be called
upon to go or reside out of the ordinary
place of his residence on the Company's
business, he shall be entitled to be
reimbursed all travelling and other expenses
incurred in connection with the business of
the Company.
Directors may act ARTICLE 66L - The continuing Director(s) may
notwithstanding vacancy. act notwithstanding any vacancy in their
body, but, if and so long as their number is
reduced below the quorum fixed by these
Articles for a meeting of the Board, the
continuing Director(s) may act for the
purpose of increasing the number of
Directors to that fixed for the quorum, or
for summoning a General Meeting, but for no
other purpose.)(27)
(31)[General powers of ARTICLE 67 - Subject to the provisions of
the company vested in the Act, the Business of the Company shall
the Board of Directors. be managed by the Directors who may pay all
expenses incurred in setting up and
registering the Company and who may exercise
all such powers and all such acts and things
as the Company is authorised to exercise and
do. Provided that the Directors Shall not
exercise any power or do any act or thing
which is directed or required whether by the
Act or any other act or by the Memorandum or
Articles of the Company or otherwise, to be
exercised or done by the
- -------------------
(27) Article 65 to 66L initially amended vide Special Resolution passed by
the shareholders at EGM held on 10 March 1993.
(31) Amended vide Special Resolution passed by the shareholders at 16th AGM
held on 20 August 2002.
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Company in general meeting.
Provided further that in exercising any such
power or doing any such act or Thing, the
directors shall be subject to the provisions
contained in that behalf in the Act or any
other act, or in the Memorandum or Articles
of the Company, or in any regulations made
by the Company in general meeting. No
regulation made by the Company in general
meeting shall invalidate any prior act of
the Directors which would have been valid if
that regulation had not been made.]
Delegation of Powers. ARTICLE 68 - (1) Subject to the provisions
of the Act, the Board may, from time to
time, delegate such of its powers as it may
think fit to the Chairman,
Chairman-cum-Managing Director and/or
Managing Director(s), subject to such terms,
conditions and restrictions as it may deem
necessary to impose and may, from time to
time, revoke, amend or vary all or any of
the powers so delegated.
(2) The Chairman, the Chairman-cum-Managing
Director and/or Managing Director(s) may
sub-delegate any of the powers delegated to
him by the Board to any officer or other
employees of the Company, subject to
condition that every such sub-delegation of
his powers will be reported to the Board.
(32)[Powers of ARTICLE 69 -
Chairman. Matters requiring (1) The property, business and affairs of
affirmative vote of the the Company shall be managed exclusively by
Government and the and be under the direction of the Board. The
Strategic Partner at Board may exercise all such powers of the
the General Meeting Company and have such authority and do all
and at the meeting of such lawful acts and things as are permitted
the Board. by applicable Law and the Memorandum of
Association and Articles of Association.
Subject to Article 69(2) below, all
decisions, actions and resolutions of the
Board shall be adopted by the affirmative
vote of a simple majority of the members of
Board.
(2) Notwithstanding any other provision of
these Articles or otherwise permitted or
provided under the Act, no obligation of the
Company or any of its subsidiaries shall be
entered into, no decision shall be made and
no action shall be taken by or with respect
to the Company or any of its subsidiaries in
relation to the following matters unless
such obligation, decision or action as the
case may be, is approved ,if at any meeting
of the Company's shareholders, duly called
for the purpose of considering such
obligation, decision or action, by an
affirmative vote of the one authorised
representative of both the Government and
the Strategic Partner, and if at the meeting
of the Board by an affirmative vote of, at
least one nominee director of each of the
Government and the Strategic
- -------------------
(32) Amended vide Special Resolution passed by the shareholders at 16th AGM
held on 20 August 2002.
38
[VSNL Company Logo] Videsh Sanchar Nigam Limited Articles of Association
- --------------------------------------------------------------------------------
Partner:
(i) Any change in the Memorandum of
Association and Articles of
Association;
(ii) The granting of any security
or the creation of any Encumbrance
on the assets of the Company or the
incurrence of any indebtedness or
guaranteeing the debts of any
Person which in the aggregate at
any time exceeds the net worth of
the Company;
(iii) The taking of any steps to
wind-up or terminate the corporate
existence of the Company or any of
its Affiliates or entering into any
arrangement with the creditors of
the Company in relation to all or
substantial part of the assets of
the Company;
(iv) Any one or a series of transactions
which causes a sale lease, exchange or
disposition of land and building of the
Company or its subsidiary which are
acquired by the Company at any time
prior to the Closing;
(v) Subject to Article 69(2)(xv)
hereunder, any sale, lease, exchange or
disposition of any property, assets or
equipments (other than land and
building)of the Company or its
subsidiary which are acquired by the
Company at any time prior to the
Closing;
(vi) The making, directly or indirectly,
of loans or advances in excess of Rs.500
million to any Person other than in the
ordinary course of business of the
Company;
(vii) The entering into of an
amalgamation, merger or consolidation
with any other company or body
corporate;
(viii) Any change in the number of
directors of the Company from that
provided in this Article;
(ix) Any agreement with or commitment to
any Shareholder or its Principal(s) or
their respective Affiliates, except
where, and to the extent, (a) such
agreement or commitment between the
Company or any of its Affiliates on the
one hand and the Government or any
Government Authority on the other is
required under applicable Law or (b)
such agreement is on an arms' length
basis and in good faith;
(x) Establishment of any subsidiary or
associated company by Company;
(xi) Transfer of any rights or interest
in Affiliates of the Company including,
without limitation, Transfer of Relevant
Interests in securities of such
Affiliates held by the Company;
39
[VSNL Company Logo] Videsh Sanchar Nigam Limited Articles of Association
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(xii) Any agreement, license or
permission in respect of the use of the
name and/or logo of the Company (except
where such agreement, license or
permission is for the purpose of, or in
connection with, advertising or
promotional activities only by the
Company);
(xiii) The delegation by the Board to
any Person of the Board's authority to
approve or authorize any matter
described in this Article 69(2);
(xiv) Change directly or indirectly in
the use of land and building of the
Company other than for the purposes of
the main objects of the Company as
defined in the Memorandum of Association
of the Company;
(xv) Any one or a series of
transactions, which causes a sale,
lease, exchange or disposition of
obsolete equipments or equipments not in
use, of the Company or its subsidiary
having an aggregate value exceeding 25%
of the total value of the net fixed
assets of the Company as specified in
the Audited Financial Statement;
(xvi) Any commitment or agreement to do
any of the foregoing. Notwithstanding
anything to the contrary contained in
these Articles, in the event any of the
aforesaid items of business mentioned in
Article 69 (2) is not approved by the
Board or Shareholders at a meeting or
otherwise then such non-approved items
shall not be implemented by the Company
and the Parties shall not directly or
indirectly take any steps to cause the
Company to implement such items of
business.]
(33)(34){[Specific Powers ARTICLE 70 - Without prejudice to the
of the Board of general powers conferred by Article 67 and
Directors. the other powers conferred by these
Articles, but subject to the provisions of
Sections 293, 293-A, and 294 of the Act and
Article 69 herein, the Board of Directors
shall have the following powers, that is to
say power:]
To acquire property. (1) To purchase, take on lease or otherwise
acquire for the company property, rights or
privileges which the company is authorised
to acquire at such price, and generally on
such terms and conditions as they think fit.
(35)(To pay for property, (2) To pay for any property, rights or
debentures etc. privileges acquired by, or services rendered
to the company either wholly or partially in
cash or in shares, bonds, debentures or
other securities of the company, and any
such shares may be issued either as fully
- -------------------
(33) Article 70 & 71 deleted and Article 72 to 105 renumbered as Article 70
to 103 vide Special Resolution passed by the shareholders at 16th AGM
held on 20 August 2002.
(34) Amended vide Special Resolution passed by the shareholders at 16th AGM
held on 20 August 2002.
40
[VSNL Company Logo] Videsh Sanchar Nigam Limited Articles of Association
- --------------------------------------------------------------------------------
paid-up or with such amount credited as
paid-up thereon as may be agreed upon and
any such bond, debentures or other
securities may be either specifically
charged upon all or any part of the property
of the company and its uncalled capital or
not so charged.
To secure contracts by (3) To secure the fulfillment of any
mortgage. contracts or engagements entered into by the
company by mortgage or charge of all or any
of the property of the company and its
uncalled capital for the time being or in
such other manner as they may think fit.
To appoint officers etc. (4) To create posts of, to appoint persons
and at their discretion, remove or suspend
general managers, managers, secretaries,
officers, clerks, agents and servants for
permanent, temporary or special services, as
they may, from time to time, think fit, and
to determine their powers and duties and fix
their salaries or emoluments and require
security in such instances and to such
amounts as they think fit.
To appoint trustees. (5) To appoint any person or persons
(whether incorporated or not), to accept and
hold in trust for the company, any property
belonging to the company or in which it is
interested or for any other purposes, and to
execute and do all such deeds and things as
may be requisite in relation to any such
trust and to provide for the remuneration of
such trustee or trustees.
To bring and defend (6) To institute, conduct, defend compound
action. or abandon, any legal proceedings by or
against the company or its officers or
otherwise concerning the affairs of the
company and also to compound and allow time
for payment or satisfaction of any claims or
demands by or against the company.
To refer to arbitration. (7) To refer any claims or demands by or
against the company to arbitration and
observe and perform the awards.
To give receipt. (8) To make and give receipts, release, and
other discharges for money payable to the
company, and for the claims and demands of
company.
To authorise (9) To determine the person(s) who shall be
acceptance etc. entitled to sign on the company's behalf,
bills, notes, receipts, acceptances,
endorsements, cheques, releases, contracts
and documents.
To appoint attorney. (10) From time to time to provide for the
management of the affairs of the company
outside the areas which in the context
includes the townships and sites of
operations of the company in such manner as
they think fit, and in particular to appoint
any person to be the attorney or agent of
the company with such powers (including
power to sub-delegate) and upon such terms
as may be thought fit.
- -------------------
(35) Article 70(2) deleted and Article 70(3) till 70(22) renumbered as 70(2)
till 70(21) vide Special Resolution passed by the shareholders at 16th
AGM held on 20 August 2002.
41
[VSNL Company Logo] Videsh Sanchar Nigam Limited Articles of Association
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(36)[To invest moneys. (11) To invest in Reserve Bank/State Bank of
India/any nationalised bank or in such
securities and deal with any of the moneys
of the company upon such investments
authorised by the Memorandum of Association
of the company (not being shares in this
company) and in such manner as they think
fit and from time to time to vary or realise
such investments.]
To give security by (12) To execute in the name and on behalf
way of indemnity. of the company in favour of any Director or
other persons who may incur or be about to
incur any personal liability for the benefit
of the company such mortgage of the
company's property (present and future) as
they think fit and any such mortgage may
contain a power of sale and such other
powers, covenants and provisions as shall be
agreed upon.
(37)[To give percentage. (13) To give to any person employed by the
company a commission on the profits of any
particular business transaction or a share
in the general profits of the company, and
such commission or share of profit shall be
treated as part of the working expenses of
the company.]
To make bye-laws. (14) From time to time make, vary and repeal
bye-laws for the regulation of the business
of the company, its officers and servants.
To give bonus. (15) To give, award, or allow any bonus,
pension, gratuity or compensation to any
employee of the company or his widow,
children or dependants, that may appear to
the Board of Directors just or proper,
whether such employee, his widow, children
or dependants have or have not a legal claim
upon the company.
To create Provident (16) Before declaring any dividend to set
Fund. aside such portion of the profits of the
company as they may think fit, to form a
fund to provide for such pensions,
gratuities or compensation or to create any
provident or benefit fund in such manner as
the Board of Directors may deem fit.
- -------------------
(36) Amended vide Special Resolution passed by the shareholders at 16th AGM
held on 20 August 2002.
(37) Amended vide Special Resolution passed by the shareholders at 16th AGM
held on 20 August 2002.
42
[VSNL Company Logo] Videsh Sanchar Nigam Limited Articles of Association
- --------------------------------------------------------------------------------
To establish Managing (17) From time to time and at any time to
Committee. establish any Managing. Committee for
managing any of the affairs of the company
in any specified locality in India, or out
of India, and to appoint any person(s) to be
member(s) of such Managing Committee and to
fix their remuneration and from time to time
and at any time to delegate to any person(s)
so appointed any of the powers, authorities
and discretion for the time being vested in
the Board of Directors other than the power
to make call; and to authorise the members
for the time being of any such Managing
Committee or any of them to fill up any
vacancies therein and to act notwithstanding
vacancies, and any such appointment or
delegation may be made in such terms, and
subject to such conditions as the Board of
Directors may think fit and the Board of
Directors may at any time remove any person
so appointed and may annul or vary any such
delegation.
To make contracts. (18) To enter into all such negotiations and
contracts and rescind and vary all such
contracts, execute and do all such acts,
deeds and things in the name and on behalf
of the company as they may consider
expedient for or in relation to any of the
matters aforesaid or otherwise for the
purposes of the company; and
To establish (19) To establish, maintain, support and
institution. subscribe to any society, etc. charitable,
benevolent, public or general useful objects
or any institution, society, or club or fund
which may be for the benefit of the company
or its employees or may be connected with
any town or place where the company carries
on its business or any object in which the
company may be interested.
(38)[To borrow or raise (20) To borrow or raise or secure the
or secure the payment payment of money in such manner as the
of money. company shall think fit and in particular by
executing mortgages and the issue of
debentures, or debenture-stock, perpetual or
otherwise, charged upon all or any of the
company's property (both present and future)
including its uncalled capital and to
purchase, redeem, or pay off any such
securities.]
To fix terms and (21) To fix terms and conditions for
conditions for providing, maintaining and operating
providing, services provided to the customers.)(36)
maintaining &
operating services.
Seal. ARTICLE 71 - The seal of the company shall
not be affixed to any instrument except by
the authority of a resolution of the Board
of Directors and except in the presence of
at least one
- -------------------
(36) Article 70(2) deleted and Article 70(3) till 70(22) renumbered as 70(2)
till 70(21) vide Special Resolution passed by the shareholders at 16th
AGM held on 20 August 2002.
(38) Amended vide Special Resolution passed by the shareholders at 16th AGM
held on 20 August 2002.
43
[VSNL Company Logo] Videsh Sanchar Nigam Limited Articles of Association
- --------------------------------------------------------------------------------
Director or such other person as the Board
may appoint for the purpose; and the said
Director or the person aforesaid shall sign
every instrument to which the seal of the
company is so affixed in his presence.
PROCEEDINGS OF THE BOARD
Meeting of the Board. ARTICLE 72 - A meeting of the Board of
Directors shall be held for the despatch of
the business of the company at least once in
every three months and at least four such
meetings shall be held in every year.
(39)[Director may ARTICLE 73 - A Director may at any time
summon meeting. convene a meeting of the Board Directors.
Questions arising at any meeting shall be
decided by majority of votes. The Chairman
shall not have a second or casting vote in
the case of an equality of votes.]
Notice of meetings. ARTICLE 74 - (1) Notice of every meeting of
the Board of Directors of the Company shall
be given in writing to every Director for
the time being in India and at his usual
address in India to every other Director.
(2) Every officer of the company, whose duty
is to give notice as aforesaid and who fails
to do so shall be punishable with fine which
may extend to one hundred rupees.
(40)[Quorum for ARTICLE 75 (1) The quorum requirement for
meetings. the Board shall be governed by the
provisions of the Act.
(2) Notwithstanding anything to the contrary
in Article 75(1) above, the presence of
at least one nominee director each of the
Government and the Strategic Partner, in
case of a Board meeting, shall be necessary
to constitute quorum for any meeting in
which a resolution for any of the matters
specified in Article 69(2) is to be passed
and a notice of not less than 7 (seven) days
shall be given to the Government and the
Strategic Partner for any such meeting,
unless the Government and the Strategic
Partner agrees to a shorter notice in
writing.
(3) In the event that no nominee director of
either the Government or the Strategic
Partner is present at a meeting referred to
in Article 75(2) above, such meeting shall
stand adjourned to the same day in the next
week, at the same time and place, or to such
later day as may be notified to the
Government or the Strategic Partner as the
case may be.
(4) In the event that no nominee director of
the same
- -------------------
(39) Amended vide Special Resolution passed by the shareholders at 16th AGM
held on 20 August 2002.
(40) Substituted vide Special Resolution passed by the shareholders at 16th
AGM held on 20 August 2002.
44
[VSNL Company Logo] Videsh Sanchar Nigam Limited Articles of Association
- --------------------------------------------------------------------------------
Shareholder, whose nominee director was not
present in the meeting referred to in
Article 75(2), is present at the adjourned
meeting referred to in Article 75(3) above,
such meeting shall stand adjourned to the
same day in the next week, at the same time
and place, or to such later day as may be
notified to such Shareholder.
(5) Notwithstanding anything to the contrary
in Article 75(2) above, in the event that no
nominee director of the same Shareholder,
whose nominee director was not present in
the meetings referred to in Articles 75(2)
and 75(3), is present at the adjourned
meeting referred to in Article 75(4), it
shall be deemed that the presence of the
nominee director of such Shareholder is not
required for such meeting and the directors
present at such adjourned Board Meeting
shall be entitled to proceed with the items
on the agenda in such manner as they deem
fit even though such items may be relating
to matters listed in Article 69(2).]
(41)[Chairman of ARTICLE 76 - The Board shall at its meeting
Board's meeting. elect a Director as Chairman of the
Directors' meetings and determine the period
for which he is to hold office. If no such
Chairman is nominated, or if at any meeting
the Chairman is not present within 15
minutes after the time for holding the same,
the Directors present may choose one of
their number to be the Chairman of the
meeting.]
Power of Quorum. ARTICLE 77 - A meeting of the Board of
Directors for the time being at which a
quorum is present shall be competent to
exercise all or any of the authorities,
powers, and discretion by or under the
Articles of company for the time being
vested in or exercisable by the Board of
Directors generally.
(42)[Delegation of ARTICLE 78 - Subject to Article 69 herein,
powers to committees. the Board may, subject to the restrictions
laid down in Section 292 of the Act,
delegate any of their powers to Committees
consisting of such number of their body as
they think fit, and may, from time to time,
revoke such delegation. Any committee so
formed, shall in the exercise of the power
so delegated, conform to any regulation that
may, from time to time, be imposed upon it
by the Board of Directors. The proceedings
of such a Committee shall be placed before
the Board of Directors at its next meeting.]
Chairman of meeting ARTICLE 79 - A Committee of Directors may
of committee. elect a Chairman of their meetings, if no
such Chairman is elected or if at any
meeting the Chairman is not present within
15 minutes after the time appointed for
holding the same, the members present may
choose one of their number to be Chairman of
the
- -------------------
(41) Amended vide Special Resolution passed by the shareholders at 16th AGM
held on 20 August 2002.
(42) Amended vide Special Resolution passed by the shareholders at 16th AGM
held on 20 August 2002.
45
[VSNL Company Logo] Videsh Sanchar Nigam Limited Articles of Association
- --------------------------------------------------------------------------------
meeting.
When acts of Directors ARTICLE 80 - All acts done by any meeting
or Committee valid of the Board of Directors, or of a Committee
notwithstanding of Directors, or by any person acting as a
defective appointment. Director shall notwithstanding that it be
afterwards discovered that there was some
defect in the appointment of such Directors
or persons acting as aforesaid or that they
or any of them were or was disqualified, be
as valid as if every such person had been
duly appointed and was qualified to be
Director. Provided that nothing in this
Article shall be deemed to give validity to
acts done by a Director after his
appointment has been shown to the company to
be invalid or to have terminated.
(43)[Resolution without ARTICLE 81 - Subject to the provisions of
Board Meeting valid. Section 292 of the Act and Article 69
herein, resolutions of the Board can be
passed by circulation and they shall be as
valid and effectual as if they have been
passed at a meeting of the Board of
Directors duly called and constituted. No
resolution shall, however, be deemed to have
been duly passed by the Board or by a
Committee thereof by circulation unless the
resolution has been circulated in draft,
together with the necessary papers, if any,
to all the Directors, or to all the members
of the Committee then in India (not being
less in number than the quorum fixed for a
meeting of the Board or Committee as the
case may be), and to all other Directors or
members at their usual address in India, and
has been approved by such of the Directors
as are then in India or by a majority of
such of them, as are entitled to vote on the
resolution.]
RESERVES AND DIVIDENDS.
Reserve Fund. ARTICLE 82 - Subject to Section 205 of the
Act, the Board may, before recommending any
dividend, set apart out of the profits of
the company such sums as they think proper
as a reserve fund to meet contingencies or
for equalising dividends, or for special
dividends, or for repairing, improving and
maintaining any of the property of the
company, and for amortisation of capital and
for such other purposes as the Board of
Directors shall, in their absolute
discretion, think conducive to the interest
of the company, and may invest the several
sums so set aside upon such investments,
(other than shares of the company) as they
may think fit from time to time to deal with
and vary such investments and dispose of all
or any part thereof for the benefit of the
company, and may divide the reserve funds
into such special funds, as they think fit
and employ the reserve funds or any part
thereof in the business of the company and
that without being bound to keep the same
separate from the other assets.
Net Profits. ARTICLE 83- The declaration of the Directors
as to the amount
- --------------------
(43) Amended vide Special Resolution passed by the shareholders at 16th AGM
held on 20 August 2002.
46
[VSNL Company Logo] Videsh Sanchar Nigam Limited Articles of Association
- --------------------------------------------------------------------------------
of net profits of the company shall be
conclusive.
(44)[Dividend. ARTICLE 84 - The profits of the company
available for payment of dividend subject to
any special rights relating thereto, created
or authorised to be created by these
presents and subject to the provisions of
these presents as to the reserve fund and
amortisation of capital, shallbe divisible
among the members in proportion to the
amount of capital paid up by them
respectively, provided always that (subject
as aforesaid) any capital paid up on a share
during the period in respect of which a
dividend is declared shall only entitle the
holder of such share to an apportioned
amount of such dividend as from the date of
payment.]
Interim dividend. ARTICLE 85 - The Board may, from time to
time, pay to the members such interim
dividends as in their judgement the position
of the company justifies.
Capital paid up in ARTICLE 86 - Where capital is paid up on any
advance. shares in advance of calls upon the footing
that the same shall carry interest, such
capital shall not, whilst carrying interest,
confer a right to participate in profits.
Declaration of ARTICLE 87 - The company, in general
dividends. meeting, may declare a dividend to be paid
to the members according to their rights and
interests in the profits but no dividend
shall exceed the amount recommended by the
Board of Directors.
(45)[Dividends out of ARTICLE 88 - No dividend shall be declared
profits only and not to or paid by the company for any financial
carry interest. year except out of profits of the company
for that year arrived at after providing for
the depreciation in accordance with the
provisions of sub-section(2) of Section 205
of the Act or out of profits of the company
for any previous financial year or years
arrived at after providing for the
depreciation in accordance with those
provisions and remaining undistributed or
out of both. No dividend shall carry
interest against the company.]
(46)[Debts may be ARTICLE 89 - The Board may retain any
deducted. dividends in respect of shares on which the
company has a lien and may apply the same in
or towards satisfaction of the debts,
liabilities or engagements in respect of
which the lien exists. No unclaimed dividend
shall be forfeited by the Board unless the
claim thereto becomes barred by law and the
company shall comply with all the provisions
of Section 205-A of the Act in respect of
unclaimed or unpaid dividend.]
- --------------------
(44) Amended vide Special Resolution passed by the shareholders at 16th AGM
held on 20 August 2002.
(45) Amended vide Special Resolution passed by the shareholders at 16th AGM
held on 20 August 2002.
(46) Amended vide Special Resolution passed by the shareholders at 6th AGM
held on 29 September 1992.
47
[VSNL COMPANY LOGO] VIDESH SANCHAR NIGAM LIMITED ARTICLES OF ASSOCIATION
- --------------------------------------------------------------------------------
Dividends to the joint ARTICLE 90 - Any one of several persons who are
holders. registered as the joint holders of any share,
may give effectual receipts for all dividends
and payments on account of dividends in respect
of such shares.
Dividends are to be paid in ARTICLE 91 - Subject to the provisions of
cash. Section 205 of the Act, no dividend shall be
payable except in cash.
Payment by post. ARTICLE 92 - Unless otherwise directed, any
dividends may be paid by cheque or warrant sent
through the post to the registered address of
the member or person entitled or in the case of
joint holders, to the registered address of
that one whose name stands first in the
register in respect of the joint holding; and
every cheque or warrant so sent shall be made
payable to the order of the person to whom it
is sent.
Notice of dividends. ARTICLE 93 - Notice of the declaration of any
dividend, whether interim or otherwise, shall
be given to the holders of registered shares in
the manner hereinafter provided.
ACCOUNTS.
Accounts to be kept. ARTICLE 94 - The company shall cause to be kept
proper books of accounts with respect to:
(a) All sums of money received and expended by
the company and the matters in respect of which
the receipt and expenditure take place;
(b) All sales and purchases made by the
company;
(c) The assets and liabilities of the company.
Inspection of Accounts ARTICLE 95 - The books of account shall be kept
Books. at the registered Office of the Company or such
other place in India as the Board of Directors
shall think fit and shall be open to inspection
by the Directors during business hours.
Inspection by members. ARTICLE 96 - The Board of Directors shall, from
time to time, determine whether and to what
extent and at what time and places and under
what conditions or regulations the accounts and
books of the company or any of them shall be
open to inspection of members (not being
Directors) and no member (not being a Director)
shall have any right of inspecting any account
or book or document of the company except as
conferred by law or authorised by the Board of
Directors or by the company in general meeting.
Annual accounts and balance ARTICLE 97 - Subject to Section 210 (3) of the
sheets. Act, at the First Annual General Meeting and
subsequently at every Annual General Meeting,
the Board shall lay before the company, a
Balance Sheet and Profit and Loss Account in
the case of the first account since the
Incorporation of the company, and in any other
case since the preceding account made upto a
date not earlier than the date of the meeting
by more than six
48
[VSNL COMPANY LOGO] VIDESH SANCHAR NIGAM LIMITED ARTICLES OF ASSOCIATION
- --------------------------------------------------------------------------------
months or where an extension of time has been
granted for holding the meeting by more than
six months and the extension so granted.
Annual report of the Board ARTICLE 98 - The Board shall make out and
of Directors. attach to every balance sheet a report with
respect to the state of the company's affairs,
the amount, if any, which they recommended
should be paid by way of dividend and the
amount, if any, which they propose to carry to
the Reserve Fund, General Reserve or Reserve
Account shown specifically on the balance sheet
or to a Reserve Fund, General Reserve or
Reserve Account to be shown specifically in a
subsequent balance sheet. The report shall be
signed by the Chairman of the Board of
Directors on behalf of the Directors,
authorised in that behalf by the Board, and
when he is not so authorised, shall be signed
by such number of Directors as are required to
sign the balance sheet and the profit and loss
account by virtue of sub-sections (1) and (2)
of Section 215 of the Act.
Content of profit and loss ARTICLE 99 - Forms of Balance Sheet and Profit
account. and Loss account shall be in accordance with
the provisions of Section 211 of the Act. The
Profit and Loss Account shall in addition to
the matters referred to in Section 211 of the
Act show, arranged under the most convenient
heads, the amount of gross income,
distinguishing the several sources from which
it has been derived and the amount of gross
expenditure distinguishing the expenses of the
establishment, salaries and other like matters.
Every item of expenditure fairly chargeable
against the year's income shall be brought into
account so that just balance of profit and loss
may be laid before the meeting, and in cases
where any item of expenditure which may in
fairness be distributed over several years has
been incurred in any one year, the whole amount
of such item shall be stated, with addition of
the reason why only a portion of such
expenditure is charged against the income of
the year.
Balance sheet and profit ARTICLE 100 - The company shall send a copy of
and loss account to such Balance Sheet and Profit and Loss Account
be sent to member of the company and to every holder
of debenture/bonds issued by the company in the
manner in which notices are to be given
hereunder at least twenty-one days before the
meeting at which it is to be laid before the
members of the company and shall deposit a copy
at the Registered Office of the company for
inspection of the members of the company during
a period of at least twenty-one days before
that meeting.
Directors to comply ARTICLE 101 - The Board shall, in all respects,
with the Sections 209 to comply with the provisions of Sections 209 to
222 of the Act. 222 of the Act, or any statutory Act.
modification thereof for the time being in
force as may be applicable to the company.
AUDIT
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Accounts to be audited ARTICLE 102 - Once at least in every financial
annually. year the accounts of the company shall be
examined and the correctness of the Profit and
loss account and Balance Sheet ascertained by
one or more auditors.
(47)[Appointment of auditors. ARTICLE 103 - The auditor/auditors of the
company shall be appointed or re-appointed by
the Company in its general meeting and
his/their remuneration, rights and duties shall
be regulated by Sections 224 to 233 of the
Act.]}(34)
(48){Auditor's right to attend ARTICLE 104 - The auditors of the company shall
meeting. be entitled to receive notice of and to attend
accounts which have been examined or reported
on by them are to be laid down before the
company and may make any statement or
explanation they desire with respect to the
accounts.
When accounts to be deemed ARTICLE 105 - Every account of the company
finally settled. when audited and approved by a General Meeting
shall be conclusive, except as regards any
error discovered therein within three months
next after the approval thereof. Whenever any
such error is discovered within the period, the
account shall forthwith be corrected and
thenceforth shall be conclusive.
NOTICE
How notices to be served on ARTICLE 106 - A notice may be given by the
members. company to any member either personally or by
sending it by post to him to his registered
address; if he has no registered address, to
the address, if any, supplied by him to the
company for the giving of notice to him.
Notifying registered place ARTICLE 107 - A holder of registered shares who
of address. has no registered place of address, may, from
time to time, notify in writing to the company
his address, which shall be deemed his
registered place of address within the meaning
of the last preceding Article.
Notice to joint holders. ARTICLE 108 - A notice may be given by the
company to the joint holders of share by
giving the notice to joint holder named first
in the register of the share.
How notice to be given to ARTICLE 109 - A notice may be given by the
deceased or company to the person deceased or bankrupt
entitled to share in consequence
- -------------------
(34) Article 70 & 71 deleted and Article 72 to 105 renumbered as Article 70
to 103 vide Special Resolution passed by the shareholders at 16th AGM
held on 20 August 2002.
(47) Amended vide Special Resolution passed by the shareholders at 16th AGM
held on 20 August 2002.
(48) Article 106 & 107 deleted and Article 108 till 123 renumbered as
50
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bankrupt member. of the death or insolvency of a member. member
by sending it through the post in a prepaid
letter addressed to them by name, or by the
title of representative of the deceased, or
assignee of the insolvent or by any like
description, at the address (if any) supplied
for the purpose by the persons claiming to be
so entitled or (until such an address has been
so supplied) by giving notice in any manner in
which the same might have been given if the
death or insolvency had not occurred.
To whom notice of general ARTICLE 110 - Notice of every general meeting
meeting to be given. shall be given in the same manner hereinbefore
authorised to (a) every member of the company
except those members who, having no registered
address, have not supplied to the company an
address for giving of notice to them, and also
to (b) every person entitled to a share in
consequence of the death or insolvency of a
member who, but for his death or insolvency,
would be entitled to receive notice of the
meeting, provided the company has been given
due notice.
Transferees bound by prior ARTICLE 111 - Every person who by operation of
notice. the law, transfer or other means whatsoever,
shall become entitled to any share, shall be
bound by every notice in respect of such
share, which previous to his name and address
and title to the share being notified to and
registered by the company, shall be duly given
to the person from whom he derives his title
to such share.
How notice to be signed. ARTICLE 112 - The signature to any notice to be
given by the company may be written or printed.
How time to be counted. ARTICLE 113 - Where a given number of days'
notice or notices extending over any other
period is required to be given, the day of
service shall, unless it is otherwise
provided, be counted in such number or other
period.
WINDING UP
Distribution of assets on ARTICLE 114 - If the company shall be wound
winding up. up and the assets available for distribution
among the members as such shall be
insufficient to repay the whole of the paid up
capital, such assets shall be distributed so
that, as early as may be, the losses shall be
borne by the members in proportion to the
capital paid up or which ought to have been
paid up at the commencement of the winding up,
on the shares held by them respectively. And
if in a winding up, the assets available for
distribution among the members shall be more
than sufficient to repay the whole of the
capital paid up, the excess shall be
distributed amongst the members in proportion
to the capital paid up, or which ought to have
been paid up on the shares held by them
respectively. But this clause is to be without
prejudice to the rights of the holders of
share issued upon special terms and
conditions.
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SECRECY
Secrecy clause. ARTICLE 115 - Every Director, Secretary,
Trustee for the company, its members, or
debenture-holders, member of a committee,
officer, servant, agent, accountant, or other
person employed in or about the business of
the company shall, if so required by the Board
before entering upon his duties, sign a
declaration pledging himself to observe strict
secrecy respecting all transactions of the
company with its customers and the state of
accounts with individuals and in matters
relating thereto and shall by such declaration
pledge himself not to reveal any of the
matters which may come to his knowledge in the
discharge of his duties except when required
so to do by the Board or by any general
meeting or by a court of law and except so far
as may be necessary in order to comply with
any of the provisions contained in these
Articles.
(49)[Restriction on entry upon ARTICLE 116 - No shareholder or other person
property. (not being a Director) shall be entitled to
enter upon the property of the company or to
inspect or examine the premises or properties
of the company without the permission of the
Board or to require discovery of or any
information respecting any detail of the
trading of the Company or any matter which is
or may be in the nature of a trade secret,
mystery of trade, or secret process or of any
matter whatsoever which may relate to the
conduct of business of the company and which
in the opinion of the Board it will be
inexpedient in the interest of the company to
communicate.]
INDEMNITY AND RESPONSIBILITY
Directors' and others' ARTICLE 117 - (i) Subject to the provisions
rights to indemnity. of Section 201 (i) of the Companies Act, every
Director, Manager, Auditor, Secretary or other
officer or employee of the company shall be
indemnified by the company against, and it
shall be the duty of the Directors out of the
funds of the company to pay all costs, losses
and expenses (including travelling expenses)
which any such Director, Manager, Officer or
employee may incur or become liable to by
reason of any contract entered into or act or
deed done by him or them as such Director,
Manager, Officer or servant or in any other
way in the discharge of his duties and the
amount for which such indemnity is provided
shall immediately attach as a lien on the
property of the company and have priority as
between the members over all other claims.
(ii) Subject as aforesaid every Director,
Manager or Officer of the company shall be
indemnified against any liability incurred by
him or them in defending any proceedings
whether civil or criminal in which judgement
is given in his or their favour or in
- ---------------
(49) Amended vide Special Resolution passed by the shareholders at 16th AGM
held on 20 August 2002
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which he is or they are acquitted or in
connection with any application under Section
633 of the Act in which relief is given to him
or them by the Court.
Individual responsibility of ARTICLE 118 - No Director or other officer of
Directors. the company shall be liable for the acts,
receipts, neglects or defaults of any other
Director or officer of the company or for
joining in any receipt or other act for
conformity or for any loss or expenses
happening to the company through the
insufficiency or deficiency of title to any
property acquired by the order of the Board of
Directors for or on behalf of the company, or
for the insufficiency or deficiency of any
security in or upon which any of the moneys of
the company shall be invested or for any loss
or damage arising from the bankruptcy,
insolvency or tortious act of any persons with
whom any moneys, securities or effects shall
be deposited or for any loss occasioned by any
error or judgement or oversight on his part or
for any other loss, damage or misfortune
whatever, which shall happen in the execution
of the duties of his office or in relation
thereto unless the same happens through his
own negligence, default, misfeasance, breach
of duty, or breach of trust.
CAPITALISATION
(50)[Power to capitalise ARTICLE 119 - (1) Any General Meeting may upon
the recommendation of the Directors, resolve
that any moneys, investments or other assets
forming part of the undivided profits of the
Company standing to the credit of any of the
Company's Reserve Accounts or to the credit of
Profit and Loss Account or any Capital
Redemption Reserve Account or in the hands of
the Company and available for dividend or
representing premiums received on the issue of
shares standing to the credit of the Share
Premium Account be capitalised and distributed
amongst such of the members as would be
entitled to receive the same if distributed by
way of dividend and in the same proportion on
the footing that they become entitled thereto
as capital and that all or any part of such
capitalised funds shall not be paid in cash
but shall be applied subject to the provisions
contained in clause (2) hereof on behalf of
such member either in or towards -
(a) Paying up any amounts for the time
being remaining unpaid on any share held
by such members respectively; or
(b) Paying up in full the unissued shares
or debentures of the company to be
allotted and distributed credited as
fully paid up to and amongst such members
in the proportions aforesaid; or
- ------------------
(50) Added vide Special Resolution passed by the shareholders at 5 th AGM
held on 6 December 1991.
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(c) Partly in the way specified in
sub-clause (a) and partly in that
specified in sub-clause (b); and that
such distribution or payment shall be
accepted by such members in full
satisfaction of their interest in the
capitalised sum.
(2) (a) Any moneys, investments or other
assets representing premium received on
the issue of shares and standing to the
credit of Shares Premium Account;
(b) If the Company shall have redeemed
any Redeemable Preference Shares, all or
any part of any Capital Redemption Fund
arising from the redemption of such
shares; may by resolution of the Company
be applied only in paying up in full or
in part any new share or any shares then
remaining unissued to be issued to such
member of the Company as the General
Meeting may resolve upto an amount equal
to the nominal amount of the shares so
issued.
(3) Any General Meeting may resolve that any
surplus moneys arising from the realisation of
any capital assets of the Company or any
investments representing the same or any other
undistributed profits of the company not
subject to charge for income tax be distributed
among the members on the footing that they
receive the same as capital.
(4) Whether such resolution under this Article
shall have been passed, the Board shall;
(a) Make all appropriations and
applications of the undivided profit
resolved to be capitalised thereby and
all allotments and issue of fully paid
shares or debentures; if any, and,
(b) Generally do all acts and things
required to give effect thereto.
(5) The Board shall have full power:
(a) To make such provisions by the issue
of fractional certificate or by payment
in cash or otherwise as it thinks fit,
for the case of shares or debentures
becoming distributable in fractions and
that fraction of less value than Re.1 may
be disregarded and also;
(b) To authorise, any person to enter on
behalf of all the members entitled
thereto, into an agreement with the
Company providing for the allotment to
them respectively credited as fully paid
up, of any further shares or debentures
to which they may be entitled upon such
capitalisation, or (as the case may
require) for the payment of the Company
on their behalf by the application
thereto of their respective proportions
of the profits resolved to be
capitalised, or the amounts or any
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part of the amounts remaining unpaid on
their existing shares and may vest any
such cash or specific assets in trustees
upon the trust for the person entitled to
the dividend or capitalised fund as may
seem expedient to the Board.
(6) Any agreement made under such authority
shall be effective and binding on all such
members.]}(49)
(51)[Shareholders' Agreement ARTICLE 120 - The Company acknowledges that the
Government and the Strategic Partner have
entered into the Shareholders' Agreement,
which is a binding voting and inter se
shareholders' agreement between them or any
transferees from them and any successors in
interest. Salient terms of the Shareholders'
Agreement are set out in appendix I* hereto to
notify the shareholders of their covenants.
The Company has undertaken that it shall not
aid and/or abet any violation of the
Shareholders' Agreement.]
*Appendix I containing salient features of Shareholders' Agreement is attached.
* * * * * * *
- ---------------
(49) Article 106 & 107 deleted and Article 108 till 123 renumbered as
Article 104 to 119 vide Special Resolution passed by the shareholders
at 16th AGM held on 20 August 2002.
(51) Amended vide Special Resolution passed by the shareholders at 16th AGM
held on 20 August 2002.
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- -----------------------------------------------------------------------------------------------------------------------
No. of Name, Signature,
Name Address, Description and Signature of Shares Address, Description &
Occupation Subscribers Equity Occupation of witness
- -----------------------------------------------------------------------------------------------------------------------
1. President of India Through Secretary, Department of Sd/- 100 Daljit Singh, S/o. Shri Jogendar
Devendra Kumar Sangal (S/o. Shri Telecommunications, Singh, Dy. Director General,
Hardhian Singh Jain) Secretary, Sanchar Bhavan, New Delhi. OCS, VSB, New Delhi.
Telecommunications.
2. Shree Shankar Sharan, S/o. Late Additional Secretary, Sd/- 10 - DO -
Shri Shambhu Sharan Dept. of Telecommunications,
Sanchar Bhavan, 20, Ashoka
Road, New Delhi
3. V. Devarajan, S/o. Late Shri N. Additional Secretary and Sd/- 10 - DO -
Venkataramanan Financial Adviser, Dept.
of Telecommunications,
Sanchar Bhavan, New Delhi.
4. K.C. Katiyar, S/o. Bhajanlal Director General, Overseas Sd/- 1 V.D. Kulkarni, S/o.
Katiyar Communications Service, D.G. Kulkarni,
Bombay. Director (Admn), OCS,
VSB, M.G. Road, Bombay
- 400 001.
5. A.W. Furtado, S/o. Late Shri R.T. Addl. Director General, Sd/- 1 Daljit Singh, S/o.
Furtado Overseas Communications Shri Jogendar Singh,
Service, VSB, Bombay. Dy. Director General,
OCS, VSB, New Delhi.
6. J.K. Chhabra, S/o. Shri D.N. Director, Dept. of Sd/- 1 - DO -
Chhabra Telecommunications,
Sanchar Bhavan, 20, Ashoka
Road, New Delhi.
7. S.D. Raheja, S/o. Late Shri S.R. Dy. Financial Adviser, Sd/- 1 - DO -
Raheja Dept. of
Telecommunications,
Sanchar Bhavan, 20, Ashoka
Road, New Delhi.
8. R.R. Anand, S/o. Late Shri Gopal Under Secretary, Dept. of Sd/- 1 - DO -
Das Anand Telecommunications,
Sanchar Bhavan, 20, Ashoka
Road, New Delhi.
9. K.P. Radhakrishnan Kidave, S/o. Under Secretary, Dept. of Sd/- 1 - DO -
Shri K.G. Kidave Telecommunications,
Sanchar Bhavan, New Delhi.
-----------
126
ONE
HUNDRED
TWENTY SIX
EQUITY
Dated this 12TH DAY OF MARCH, 1986.
Place - Bombay.
* * * * * *
56
APPENDIX I
EXTRACT OF THE SHAREHOLDERS' AGREEMENT DATED 13 FEBRUARY 2002
ARTICLE III
EQUITY PARTICIPATION
3.1 EQUITY PARTICIPATION
(a) The Parties acknowledge that a Transfer of Equity Shares by
the Government to the employees of the Company upto 2% of the paid up
share capital of the Company may occur after the Closing and that the
Transfer of Equity Shares by the Government to the employees of the
Company may be effected in such manner as may be determined by the
Government in its sole discretion (including, without limitation,
through an Offer for Sale, by Transfer in favour of any Person for the
benefit of employees of the Company or through an employees stock
purchase scheme).
3.2 ADDITIONAL CAPITAL
(a) Notwithstanding any other provision of this Agreement, if the
Board, in exercise of good faith and in its reasonable judgement,
determines that the Company requires additional funds, the Board may
request, by issuance of a notice (the "Funding Notice") to all the
shareholders of the Company, to contribute, within 90 Business Days
after the issuance of the Funding Notice (the "Funding Period"),
additional capital to the Company, on a pro rated basis depending upon
the number of voting shares of the Company then held by such
shareholders, by way of subscription for additional voting equity
shares in accordance with Section 81(1) of the Act or provide a loan to
the Company, all as determined by the Board and set forth in the
Funding Notice.
(b) If additional capital is to be contributed pursuant to
Article 3.2(a) by way of subscription for additional voting equity
shares of the Company, then the subscription price for each such
additional voting equity share shall be determined by the Board and set
out in the Funding Notice. The Company shall, promptly upon the receipt
of such subscription amount, issue to its shareholders the appropriate
number of voting equity shares based upon the payment received from
each such shareholder. Such voting equity shares shall rank pari passu
with the existing Shares in all respects except for the purposes of
dividend that shall be pro rated to the period for which such newly
issued shares are in existence.
(c) If any offer to subscribe for voting equity shares of the
Company pursuant to Article 3.2(a) (such offer, the "Right") includes a
right to renounce the Right in favour of any other Person, then, no
Shareholder shall renounce such Right in favour of any other Person
(other than an Affiliate of the renouncing Shareholder) without first
giving the other Shareholder a reasonable opportunity to acquire such
Right, either directly or through its nominees on the same terms and
conditions that such Right is proposed to
58
be renounced in favour of any other Person (other than an Affiliate of
the renouncing Shareholder).
(d) Any Person other than a Party hereto, who acquires any Shares
pursuant to Article 3.2 (c), shall execute a Deed of Adherence and an
undertaking to adhere to the terms and conditions of this Agreement.
The rights of such Person shall be determined in the following manner:
(i) Subject to the provisions of Article 3.2 (c) above,
in the event that a non-renouncing Shareholder exercises its
option to cause its nominee to acquire the Right, such
non-renouncing Shareholder shall exercise all the rights and
privileges on behalf of such nominee and shall be responsible
for all the duties and obligations of such nominee under the
terms of this Agreement. The rights of the non-renouncing
Shareholder and such nominee shall be the rights available to
the non-renouncing Shareholder under this Agreement and no
additional rights or privileges shall accrue to or be
available to the non-renouncing Shareholder or the nominee.
(ii) Subject to the provisions of Article 3.2 (c) above,
in the event that a non-renouncing Shareholder does not
exercise its option to acquire or cause its nominee to acquire
the Rights and the renouncing Shareholder offers the Right to
a third party, such renouncing Shareholder shall exercise all
the rights and privileges on behalf of such third party and
shall be responsible for all the duties and obligations of
such third party under the terms of this Agreement. The rights
of the renouncing Shareholder and such third party shall be
the rights available to the renouncing Shareholder under this
Agreement and no additional rights or privileges shall accrue
to or be available to the renouncing Shareholder or the third
party.
(e) For the avoidance of doubt, under no circumstances shall a
failure to provide funds by a Shareholder pursuant to a Funding Notice
be considered to be a default by such Shareholder under this Agreement
or make such Shareholder in any way liable for the payment of such
funds.
(f) In the event that any of the Affiliate(s) of the Strategic
Partner becomes a Shareholder of the Company, whether pursuant to
Article 3.2 or otherwise, the Strategic Partner shall cause such
Affiliate(s) to execute a Deed of Adherence.
ARTICLE IV
GENERAL OBLIGATIONS
4.1 MAXIMUM PERMISSIBLE FOREIGN PARTICIPATION
Notwithstanding any provision in this Agreement to the contrary, no
Party (other than the Government, and at the instance of the
Government, the Company) shall take any action or engage in any conduct
[including, without limitation, the issue by the Company of any
securities including Equity Shares, or equity-linked securities or
securities convertible into Equity Shares] that would increase the
Foreign Participation in the Company to greater than such permissible
percentage of shareholding as is prescribed by the Government from time
to time under applicable Law, rule or regulation in India with
59
respect to Foreign Participation in the Company (the "Maximum
Permissible Foreign Participation")
4.2 SOURCE OF FUNDS/PROHIBITED PERSON
(a) Each Shareholder (other than the Government) and its
Principal(s) shall furnish to the Government such information regarding
the source of funds of such Shareholder, Principal(s) and their
respective Affiliates as required by the Government from time to time,
including without limitation, information relating to the source and
the amount of funds or other consideration to be used in subscription
or purchase of any Equity Shares or granting any Shareholder Loans to
the Company, and if any part of the proposed subscription or Purchase
Price is to be represented by funds or other consideration borrowed or
otherwise obtained for the purpose of acquiring or holding Equity
Shares or granting any Shareholder Loans, a description of such
transaction and the names of the parties thereto. Such information
shall be provided to the Government prior to the utilization of such
funds for subscription or purchase of any Equity Shares or granting any
Shareholder Loans to the Company.
(b) Notwithstanding anything to the contrary contained in this
Agreement, for purposes of clarity and avoidance of doubt, each
Shareholder and its Principal(s) agrees that the information provided
to the Government regarding the source of funds of such Shareholder,
its Principal(s) and their respective Affiliates of such Shareholder
then holding any Equity Shares shall be without prejudice to, and shall
not preclude or limit any Government Authority from undertaking, any
investigation, inquiry or other course of action with respect to the
affairs (including without limitation the source of funds) of such
Shareholder, its Principal (s) and/or their respective Affiliates.
(c) Each Shareholder (other than the Government) and its
Principal(s) shall ensure that neither such Shareholder, nor its
Principal(s) nor any of its respective Affiliates is Controlled by a
Prohibited Person.
4.3 MATTERS RELATING TO EXCEPTIONAL ACTS
(a) The Strategic Partner shall cause the Company to fully comply
with the provisions of and requirements under the Company Agreements in
order that the Company continue to avail of the benefits thereunder.
Notwithstanding any other provision of this Agreement, if the Board or
an appropriate Government Authority determines (the "Determination")
that (i) an Exceptional Act has taken place or is contemplated,
threatened or intended; or (ii) the ownership or control of the Company
is such that an Exceptional Act may occur; the Board, the Government or
the appropriate Government Authority may take any steps as, in the sole
discretion of the Board, the Government or the appropriate Government
Authority (it being understood that in case of a conflict or
disagreement regarding the steps to be taken, the decision of the
Government shall prevail) may be necessary or desirable to overcome,
prevent or avoid an Exceptional Act including, without limitation (i)
issuance of additional Equity Shares to the Government or its
nominee(s) or any Person by means of a preferential allotment of
shares; (ii) removal of any directors or executive officers; and (iii)
identification of the Equity Shares which gave rise to the
Determination or would have given rise to a Determination and require
the compulsory disposal, or restrict the transferability of such Equity
Shares. The Parties agree that the Articles of Association of the
Company shall, subject to applicable Laws, contain provisions relating
to the above, including giving
60
additional powers to limit the number of voting rights of specified
Persons or require the compulsory disposal or restrict the
transferability of Equity Shares held by such Persons.
(b) Each Shareholder and its Principal(s) agree to, and agree to
cause their respective Affiliates to, fully comply with any steps taken
by the Board or the appropriate Government Authority under this Article
4.3 including, without limitation, voting in favour of any resolutions
at any Board or shareholders meetings in connection with any action
contemplated under this Article 4.3.
4.4 CHANGE IN STRATEGIC PARTNER STRUCTURE
For a period of three years from the Closing, the Strategic Partner
shall not issue any additional shares or securities to any Person other
than the Principal(s), if after the issue of such shares or securities
or the conversion into voting securities of any convertible securities,
the Strategic Partner would no longer be Controlled by its
Principal(s).
4.6 NATIONAL SECURITY
The Strategic Partner and the Principal shall, and shall cause the
Company to, comply, at all times, and from time to time, with the
conditions of licences or orders or other directions of the Government
or any applicable Government Authority or body or the like in
connection with or relating to the security of the Republic of India,
public emergencies or in the interest of safety or tranquility under
applicable Law, as amended, modified or re-enacted from time to time.
4.7 LAND
(a) (i) The Strategic Partner confirms that it shall cause
and procure the Company to hive off or demerge the Land into
the Resulting Company pursuant to a scheme of arrangement in
terms of the provisions of Section 391 to 394 of the Act.
(ii) The Strategic Partner confirms its understanding that
it will transfer all such shares in the Resulting Company to
the Government as it may acquire as a consequence of this
transaction, that is a minimum of 25% of the Resulting
Company's issued equity shares or a higher number which shall
include shares in the Resulting Company that it may further
acquire as a consequence of any further sale of the Equity
Shares in the Company by the Government to the Strategic
Partner, prior to the demerger, as part consideration of
transfer of the Transaction Shares and any subsequent sale of
the Company's shares by the Government to the Strategic
Partner, pursuant to this transaction.
(b) The Strategic Partner confirms that:
(i) it shall do and cause to be done all and any such
acts, matters, deeds and things as are necessary, usual or
expedient including voting in favour of the item of business
relating to the approval of the scheme of arrangement to
implement the hiving off or demerging of the Land into the
Resulting Company;
61
(ii) it shall not directly or indirectly do or cause to be
done any acts, matters, deeds or things which may adversely
affect or delay the hiving off or demerging of the Land into
the Resulting Company.
(c) (i) If for any reason the Company cannot hive off or
demerge the Land into the Resulting Company then, subject to
Article 5.6 (b) (iv) and (xiv) hereto at any time when the
Company sells or transfers the Land or agrees to sell or
transfer or otherwise develop the Land, the Strategic Partner
shall pay to the Government within seven days of the sale or
transfer of the Land an amount equivalent of 25% of the
benefit accruing to the Company pursuant to such sale or
transfer or otherwise development of the Land , as determined
by the Appraiser, after taking into account any impact under
the Income Tax Act, 1961.
(ii) Subsequent to this Agreement and the Share Purchase
Agreement, if the Government sells more than 25% of its equity
shareholding in the Company to the Strategic Partner, then the
percentage of amount to be paid to the Government by the
Strategic Partner on account of sale or transfer or otherwise
development of the Land under Article 4.7(c)(i)shall increase
in proportion to the percentage of such further sale of equity
shareholding in the Company by the Government to the Strategic
Partner. For the purpose of this Article the term "transfer"
shall include sale, lease, licence, grant of development
rights or the parting of physical possession of the Land or
transfer of any interest, whatsoever, in the Land.
ARTICLE V
MANAGEMENT OF THE COMPANY
5.1 CONSTITUTION OF THE BOARD OF DIRECTORS
(a) On the Closing the Board shall comprise of 12 directors.
(b) As long as the Government holds atleast 10% of the voting
equity share capital of the Company the composition of the
Board shall be as under:
(i) Four out of twelve directors shall be permanent or
non-retiring directors, of which the Government and the
Strategic Partner shall be entitled to appoint two directors
each.
(ii) The balance eight directors shall be liable to retire
by rotation. Of the retiring directors, four directors shall
be independent directors on the Board.
(iii) Of the four independent directors the Strategic
Partner and the Government shall be entitled to nominate and
recommend names of two independent directors each.
(iv) The composition of the balance four directors i.e.
the retiring and non independent directors shall be as under:
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iv.i. As long as the Strategic Partner together with its
Affiliates holds 25% of the voting equity share capital of the
Company, two directors shall be nominated each by the
Government and the Strategic Partner.
iv.ii. As soon as the Strategic Partner acquires and holds
more than 25% but less than 30% of the voting equity share
capital of the Company, the Strategic Partner shall have the
right to appoint three directors on the Board and the
Government shall have the right to appoint one Director on the
Board.
iv.iii. As soon as the Strategic Partner acquires and holds
more than 30% of the voting equity share capital of the
Company, the Strategic Partner shall have the right to appoint
all the four directors.
(c) Notwithstanding anything to the contrary, contained in this
Agreement (i) the Government shall have the right to appoint
two non retiring Directors so long as the Government holds
atleast 10% of the voting equity share capital of the Company
and (ii) the Government shall be entitled to appoint one non
retiring director on the Board so long as the Government is a
shareholder in the Company.
(d) Subject to the provisions of sub clauses ( c ) above and (e)
below, if a Person, other than a Party to this Agreement, to
whom a Shareholder has transferred its Shares (or any equity
rights or interests therein) or renounced the Right pursuant
to Section 3.2, requests the right to nominate one or more
directors, and at the time of such request, such request
complies with the requirements of the Act, the right to
nominate one or more directors (depending on the percentage of
the equity share holding in the Company held by the
Shareholder who has transferred the Shares or renounced the
Right, as the case may be) shall be taken from such
Shareholder who has transferred the Shares or renounced the
Right, as the case may be and not from the other Shareholders
and such request shall not be fulfilled by increasing the
total number of directors constituting the Board. For the
purpose of clarity and removal of doubt, if at any time after
the expiry of three years from the Closing, the Strategic
Partner, together with its Affiliates, holds less than 25% of
the voting equity share capital of the Company, the
composition of the Board shall be suitably changed in
accordance with the provisions of the Act.
(e) Notwithstanding the foregoing, at least three-fourths of the
total number of directors on the Board shall, at all times, be
Indian Nationals.
(f) For purposes of clarity and avoidance of doubt, the Government
and the Strategic Partner agree that if additional independent
directors are required to be appointed to the Board to comply
with any Laws or regulation or to comply with the provisions
of any listing agreement, then, by mutual agreement between
the Government and the Strategic Partner, either the strength
of the Board shall be increased to the extent required or the
number of directors that each of the Government and the
Strategic Partner shall be entitled to appoint under Article
5.1(a) and 5.1(b) hereof shall be proportionately reduced.
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(g) The proportion of representation of the Parties on any
committees or sub-committees of the Board shall be the same as
that of the Parties on the Board.
(h) In the event that the Board constitutes a share transfer
committee for the purpose of effecting the transfer of the
Shares, such share transfer committee shall include one
nominee of the Strategic Partner and the Government each.
(i) The Strategic Partner, Principal(s) and the Government shall
cause the Company to take all and any steps as may be required
under the Act to effect the appointment of the directors. Each
of the Government and the Strategic Partner shall be entitled
to remove and replace its nominees (except the independent
directors) from time to time as provided in Article 5.3. Both
the Government and the Strategic Partner shall vote the Equity
Shares held by them to elect the directors nominated/appointed
in accordance with this Agreement. As long as the Strategic
Partner holds 25% of the then-outstanding Equity Shares, one
of the director nominated by the Strategic Partner shall be
the Managing Director of the Company.
5.2 ALTERNATE DIRECTORS
If any director is reasonably expected to be or is absent for a period
of not less than three (3) calendar months from India where the
registered office of the Company is located, the Board may, at a
meeting of the Board or by circulation of a written resolution of the
Board in accordance with applicable Law, appoint an alternate director.
The alternate director shall be an individual nominated by the director
in whose place such alternate director is being appointed, and the
Shareholders shall cause their nominees on the Board to approve the
appointment of such individual as an alternate director.
5.3 REMOVAL, RETIREMENT AND REPLACEMENT OF NOMINEES
Each Shareholder shall be entitled to remove any director appointed by
it to the Board by Notice to such director and the other Parties. Any
vacancy occurring on the Board by reason of retirement, death,
disqualification, resignation, removal or the inability to act of any
director for any reason whatsoever shall be filled only by another
nominee of the Party whose nominee was so affected so as to maintain a
Board consisting of the number of nominees specified in Article 5.1.
Retirement of any director shall also be subject to any applicable
provisions in the Articles of Association.
5.4 MEETINGS OF BOARD
The Board shall meet at least once every calendar quarter and there
shall be at least four (4) Board meetings in any given calendar year.
In the event that a meeting of the Board is not held before the end of
any calendar quarter period, any director may call a meeting of the
Board upon 72 hours prior Notice to the other directors. The Managing
Director shall work under the overall supervision, direction and
control of the Board.
5.5 Quorum
(a) The quorum requirement for the Board and shareholders meeting
of the Company shall be governed by the provisions of the Act
and the Strategic
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Partner shall cause the Company to ensure that the Government
is given written notice of at least seven days in respect of
Board meetings.
(b) Notwithstanding anything to the contrary in Article 5.5(a)
above, the presence of atleast one nominee director each of
the Government and the Strategic Partner, in case of a Board
meeting, or at least one authorised representative each of the
Government and the Strategic Partner, in case of a general
meeting, shall be necessary to constitute quorum for any
meeting in which a resolution for any of the matters specified
in Article 5.6(b) is to be passed and a notice of not less
than 7 (seven) days shall be given to the Government and the
Strategic Partner for any such meeting, unless the Government
and the Strategic Partner agrees to a shorter notice in
writing.
(c) In the event that no nominee director or authorised
representative of either the Government or the Strategic
Partner is present at a meeting referred to in Article 5.5(b)
above, such meeting shall stand adjourned to the same day in
the next week, at the same time and place, or to such later
day as may be notified to the Government or the Strategic
Partner as the case may be.
(d) In the event that no nominee director or authorised
representative of the same Shareholder, whose nominee
director/authorised representative was not present in the
meeting referred to in Article 5.5(b), is present at the
adjourned meeting referred to in Article 5.5(c) above, such
meeting shall stand adjourned to the same day in the next
week, at the same time and place, or to such later day as may
be notified to such Shareholder.
(e) Notwithstanding anything to the contrary in Article 5.5(b)
above, in the event that no nominee director / authorised
representative of the same Shareholder, whose nominee director
/ authorised representative was not present in the meetings
referred to in Articles 5.5(b) and 5.5(c), is present at the
adjourned meeting referred to in Article 5.5(d), it shall be
deemed that the presence of the nominee director / authorised
representatives of such Shareholder is not required for such
meeting and the directors / shareholders present at such
adjourned Board / general meeting shall be entitled to proceed
with the items on the agenda in such manner as they deem fit
even though such items may be relating to matters listed in
Article 5.6(b).
5.6 APPROVAL OF MATTERS
(a) The property, business and affairs of the Company shall be
managed exclusively by and be under the direction of the
Board. The Board may exercise all such powers of the Company
and have such authority and do all such lawful acts and things
as are permitted by applicable Law and the Memorandum of
Association and Articles of Association. Subject to Article
5.6(b) below, all decisions, actions and resolutions of the
Board shall be adopted by the affirmative vote of a simple
majority of the members of Board.
(b) Notwithstanding any other provision of this Agreement or
otherwise permitted or provided under the Act, no obligation
of the Company or any of its subsidiaries shall be entered
into, no decision shall be made and no action shall be taken
by or with respect to the Company or any of its subsidiaries
in relation to the
65
following matters unless such obligation, decision or action
as the case may be, is approved, if at any meeting of the
Company's shareholders, duly called for the purpose of
considering such obligation, decision or action, by an
affirmative vote of the one authorised representative of both
the Government and the Strategic Partner, and if at the
meeting of the Board by an affirmative vote of, at least one
nominee director of each of the Government and the Strategic
Partner:
(i) Any change in the Memorandum of Association and Articles of
Association;
(ii) The granting of any security or the creation of any
Encumbrance on the assets of the Company or the incurrence of
any indebtedness or guaranteeing the debts of any Person which
in the aggregate at any time exceeds the net worth of the
Company;
(iii) The taking of any steps to wind-up or terminate the corporate
existence of the Company or any of its Affiliates or entering
into any arrangement with the creditors of the Company in
relation to all or substantial part of the assets of the
Company;
(iv) Any one or a series of transactions which causes a sale lease,
exchange or disposition of land and building of the Company or
its subsidiary which are acquired by the Company at any time
prior to the Closing;
(v) Subject to Article 5.6(b)(xv) hereunder, any sale, lease,
exchange or disposition of any property, assets or equipments
(other than land and building) of the Company or its
subsidiary which are acquired by the Company at any time prior
to the Closing;
(vi) The making, directly or indirectly, of loans or advances in
excess of Rs.500 million to any Person other than in the
ordinary course of business of the Company;
(vii) The entering into of an amalgamation, merger or consolidation
with any other company or body corporate;
(viii) Any change in the number of directors of the Company from that
provided in this Agreement;
(ix) Any agreement with or commitment to any Shareholder or its
Principal(s) or their respective Affiliates, except where, and
to the extent, (a) such agreement or commitment between the
Company or any of its Affiliates on the one hand and the
Government or any Government Authority on the other is
required under applicable Law or (b) such agreement is on an
arms' length basis and in good faith;
(x) Establishment of any subsidiary or associated company by
Company;
(xi) Transfer of any rights or interest in Affiliates of the
Company including, without limitation, Transfer of Relevant
Interests in securities of such Affiliates held by the
Company;
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(xii) Any agreement, license or permission in respect of the use of
the name and/or logo of the Company (except where such
agreement, license or permission is for the purpose of, or in
connection with, advertising or promotional activities only by
the Company);
(xiii) The delegation by the Board to any Person of the Board's
authority to approve or authorize any matter described in this
Article 5.6 (b);
(xiv) Change directly or indirectly in the use of land and building
of the Company other than for the purposes of the main objects
of the Company as defined in the Memorandum of Association of
the Company;
(xv) Any one or a series of transactions, which causes a sale,
lease, exchange or disposition of obsolete equipments or
equipments not in use, of the Company or its subsidiary having
an aggregate value exceeding 25% of the total value of the net
fixed assets of the Company as specified in the Audited
Financial Statement;
(xvi) Any commitment or agreement to do any of the foregoing.
Notwithstanding anything to the contrary contained in this Agreement in the
event any of the aforesaid items of business mentioned in Article 5.6 (b) is not
approved by the Board or Shareholders at a meeting or otherwise then such
non-approved items shall not be implemented by the Company and the Parties shall
not directly or indirectly take any steps to cause the Company to implement such
items of business. The non-approval of the aforesaid items of business at a
meeting or otherwise of the Board or the Shareholders shall not be considered as
subject matter of dispute, difference, disagreement or the like between the
Government and the Strategic Partner and the non approval of such item of
business will not be referred to Arbitration under this Agreement.
5.7 DEEMED CONSENT
Any resolution in writing signed by a member of the Board who is
nominated by a Shareholder shall be deemed to constitute the consent to
such resolution of such Shareholder and any matter recorded in the
minutes of a meeting of directors or shareholders as having been
approved or agreed upon, by resolution or otherwise, shall, subject to
any contrary intention being indicated in the minutes, be deemed to
have been consented to by a Shareholder if the minutes are signed by
that Shareholder or, in the case of a meeting of directors, signed by
one or more of the directors nominated and elected by that Shareholder.
5.8 VOTING REQUIREMENTS
Excepting the matters listed in Article 5.6(b) or such matters that
require a special resolution under the provisions of the Act, the
Government or any other entity nominated by it shall, at all
shareholders' meetings of the Company, exercise the voting rights
attached to the Equity Shares of the Company held by the Government in
the manner directed in writing by the Strategic Partner. For purposes
of clarity and avoidance of doubt, on any resolution(s) that directly
or indirectly relates to matters specified in Article 5.6(b) or such
matters that require a special resolution under the provisions of the
Act,
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the Government shall be free to exercise the voting rights attached to
the Equity Shares held by it in the manner it deems fit.
ARTICLE VI
TRANSFER OF EQUITY SHARES
6.1 RESTRICTIONS ON TRANSFER OF SHARES
(a) Except as expressly provided in this Agreement, or as may
otherwise be unanimously agreed, the Strategic Partner shall not, for a
period of 3 (three) years from Closing, directly or indirectly, sell,
transfer, assign, pledge, charge, mortgage or in any other way dispose
of or encumber ("Transfer") any Transaction Shares or the legal or
beneficial ownership of Transaction Shares or any of its rights or
obligations under this Agreement, to any Person.
(b) Notwithstanding what is provided hereinabove in Article
6.1(a), the Strategic Partner may with the prior written approval of
the Government, pledge the Shares held by it to a financial
institution, a scheduled bank or a recognized lender as security for
any loan or advances made by such financial institution, scheduled bank
or recognized lender, provided however that the identity of the
proposed pledgee is disclosed to the Government and such pledgee
confirms that the pledge shall be bound by the restrictions on transfer
of Shares and the contractual obligations and covenants as provided in
this Agreement. The Government agrees that it shall not unreasonably
withhold its consent to a proposal by the Strategic Partner to pledge
the Transaction Shares held by the Strategic Partner in accordance with
this Article.
(c) The Parties agree that in the event that any share transfer
committee is constituted pursuant to Article 5.1(h), Transfer of any
Shares held by any Shareholder shall not be approved by such share
transfer committee without an affirmative vote of the nominees of both
the Strategic Partner and the Government on the share transfer
committee. Provided, however, that the Strategic Partner and the
Government nominee on the share transfer committee shall not withhold
their approval to any transfer of Share if such transfer is in
accordance with the terms of the Agreement.
(d) No Transfer or attempt to Transfer (whether or not to an
Affiliate) shall be permitted if there is any breach or violation,
whether threatened or actual, of any provision of Articles 4.1, 4.2 or
4.3.
(e) Notwithstanding any provision in this Agreement to the
contrary, there shall be no Transfer or attempt to Transfer of
Transaction Shares by any Shareholder (other than the Government) to
any Person ( other than its Affiliate, subject to Article 6.5 ) except
with the prior written approval of the Government with respect to the
identity of the transferee and confirmation by the Government that the
transferee is not a Prohibited Person.
(f) For a period of 3 (three) years from Closing, all share
certificates (if any) with respect to the Shares held by the Government
and in the event that at any time prior to
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the expiry of 3 (three) years from Closing, the Strategic Partner holds
any of its Transaction Shares in the form of physical share
certificates, then the share certificates for such of the Strategic
Partner's Shares shall bear the following legend either as an
endorsement or on the face of such share certificate:
"THIS CERTIFICATE AND THE SHARES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT IN ALL RESPECTS TO THE PROVISIONS OF THE SHAREHOLDERS AGREEMENT
AND THE SHARE PURCHASE AGREEMENT BOTH OF WHICH ARE DATED 13TH FEBRUARY
2002 AND 6TH FEBRUARY 2002 RESPECTIVELY, BY AND AMONG THE PRESIDENT OF
INDIA, PANATONE FINVEST LIMITED, TATA SONS LIMITED, TATA POWER COMPANY
LIMITED, TATA IRON AND STEEL COMPANY LIMITED AND TATA INDUSTRIES
LIMITED. COPIES OF WHICH ARE ON FILE AT THE CORPORATE OFFICE OF THE
COMPANY. SUCH SHAREHOLDERS AGREEMENT. AMONG OTHER THINGS, IMPOSES
VARIOUS RESTRICTIONS ON THE TRANSFER, SALE, ASSIGNMENT, PLEDGE,
HYPOTHECATION, GIFT, PLACEMENT IN TRUST (VOTING OR OTHERWISE), OR OTHER
ENCUMBRANCE OR DISPOSAL OF AN INTEREST IN, DIRECTLY OR INDIRECTLY AND
WHETHER OR NOT VOLUNTARILY, BY OPERATION OF LAW OR OTHERWISE, THE
COMPANY'S EQUITY SHARES, PAR VALUE RS. 10/- PER SHARE (THE "EQUITY
SHARES"), AND GRANTS TO CERTAIN SHAREHOLDERS OF THE COMPANY CERTAIN
OPTIONS TO PURCHASE AND SELL THE EQUITY SHARES." THE ABOVE LEGEND SHAL
BE VALID FOR A PERIOD COMMENCING FROM 13TH FEBRUARY 2002 TILL 12TH
FEBRUARY 2005 AND SHALL BE DEEMED TO HAVE AUTOMATICALLY LAPSED UPON THE
EXPIRY OF THREE YEARS FROM THE DATE OF THE ENDORSEMENT OR THE EXPIRY OF
THE SHAREHOLDERS' AGREEMENT WHICHEVER IS EARLIER.
(g) Upon the expiry of three (3) years from Closing, the Strategic
Partner shall have the right to submit the share certificates if any
bearing the legend to the Company and seek the substitution by a new
share certificate without the legend.
(h) The Parties recognize that the Strategic Partner has executed
a Non -Disposal Undertaking to record inter-alia, their obligations in
order to give effect to the provisions of the Shareholders' Agreement
requiring the Strategic Partner not to transfer the Transaction Shares
for a period of 3(three) years from the Closing, except as provided
herein.
6.2 RIGHT OF FIRST REFUSAL
(a) Subject to Article 6.1(a), if the Government desires to sell
all or any of the voting equity shares of the Company held by it, or if
the Strategic Partner desires to sell all or any of the Transaction
Shares, or any other voting equity shares of the Company acquired
pursuant to this Agreement, the Government or the Strategic Partner, as
the case may be, (the "Offeror") shall first offer (the "Offer") to
sell such voting equity shares of the Company to the other Shareholder
(the "Other Shareholder"). The Offeror shall send a notice of the offer
(the "Sale Notice") to the Other Shareholder irrevocably offering to
sell the Offeror Shares, for cash, to the Other Shareholder.
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(b) The Sale Notice shall clearly stipulate among other things,
the number of such voting equity shares of the Company that the
Offerors desires to sell (the "Offer Shares"), the price at which it
wishes to sell the Offer Shares (the "Offer Price"), and details of any
willing third party buyer, if any.
(c) Upon the Sale Notice being given, the Other Shareholder shall
have the right, exercisable at its sole discretion, to purchase all,
but not less than all, of the Offer Shares.
(d) Within 30 Business Days of the Sale Notice (the "Offer
Period"), the Other Shareholder may give to the Offeror a notice in
writing (an "Acceptance Notice") accepting the offer contained in the
Sale Notice. If the Acceptance Notice is given by the Other
Shareholder, the transaction of purchase and sale shall be completed
within 60 Business Days of the expiry of the Offer Period.
(e) If the Other Shareholder does not give Acceptance Notice in
accordance with the provisions of Article 6.2(d), the rights of the
Other Shareholder, subject to the terms provided in this Article 6.2,
to purchase the Offer Shares shall cease and the Offeror may sell the
Offer Shares to any Person or Persons within (60) Business Days after
the expiry of the Offer Period, for a price and on terms no more
favourable to such Persons than those set out in the Sale Notice.
Provided however for the first four years from the Closing the
Government shall not sell the Offer Shares to any person other than to
public in open market if the Other Shareholder does not give Acceptance
Notice in accordance with the provision of Article 6.2 (d). If the
Offer Shares are not sold within such 60 Business Day period on such
terms, the rights of the Other Shareholder pursuant to this Article 6.2
shall again take effect with respect to any sale of voting equity
shares of the Company held by the Offeror, and so on from time to time.
For the avoidance of doubt, if the Offeror proposes to sell the Offer
Shares at a price lower than the Offer Price stipulated in the Sale
Notice, the Offeror shall be bound to offer the Offer Shares at such
lower price to the Other Shareholder in accordance with Article 6.2(a)
and such lower price shall then be deemed to be the "Offer Price" for
the purposes of this Article 6.2.
(f) Notwithstanding anything to contrary contained in this Article
6.2, whenever the Government desires to sell its Shares by way of offer
for sale in open market, Offer Price for the purposes of right of first
refusal to the Strategic Partner shall be Fair Value. Further, if the
Strategic Partner does not issue an Acceptance Notice, the Government
may make an offer for sale to public at a price other than Fair Value
and the Government will have 120 days to make an Offer for Sale to
public and the Strategic Partner's right of first refusal will be
reinstated only after expiry of 120 days.
(g) The Strategic Partner and the Government shall cause such
resolutions to be passed at the shareholders' meeting and Board meeting
as may be required for listing of the Company's Shares at the Stock
Exchange(s), under applicable Law, including without limitation,
Securities Exchange Board of India guidelines and listing conditions.
Further, the Strategic Partner and the Government through their
respective nominee directors shall cause the Company to comply with all
Securities and Exchange Board of India guidelines, issue norms and
listing guidelines and all other conditions for listing under
applicable Law.
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(h) Except when the sale is to public pursuant to an offer for
sale, the Other Shareholder shall be entitled to require proof that the
purchase and sale of the Offer Shares was completed at a price and on
terms no more favourable than those that would have been applicable had
the Other Shareholder agreed to purchase the Offer Shares
(i) All Sale Notices, Acceptance Notices or any other notices
given under this Article shall be given concurrently to the Company.
(j) Notwithstanding anything to the contrary in this Article 6,
the Government, shall at its sole discretion, have the option of
selling from its shares representing not more than 2% (two percent) of
the equity share capital existing as of date of this Agreement, to the
employees of the Company. In the event that the Government exercises
its option to sell part of its shares to the employees, the employees
shall be issued fresh share certificates for the shares transferred to
the employees, without the endorsement of the legend provided in
Article 6.1(f). The Parties agree that, upon the completion of
transfer, the shares transferred to the employees pursuant to this
Article 6.2 (j) shall not be subject to any restrictions in the
Agreement, whether by way of a voting arrangement or a right of first
refusal.
6.3 TAG ALONG RIGHT
(a) Notwithstanding anything to the contrary in this Article 6.3,
but subject to the restrictions in Articles 6.1 and 6.2 in the event
that the Government decides not to exercise its right to first refusal
pursuant to a Sale Notice (as defined in Article 6.2(a)), the
Government at any time before the expiry of the Offer Period (as
defined in Article 6.2(d)), may instead of exercising its right to
purchase the Offer Shares (as defined in Article 6.2(b)), send a tag
along notice (the "Tag Along Notice") to the Strategic Partner
requiring the Strategic Partner to ensure that the proposed third party
purchaser of the Offer Shares purchases the Equity Shares offered by
the Government at the same price and on the same terms as the Offer
Shares.
(b) In the event that the Government delivers a Tag Along Notice
to the Strategic Partner, the Strategic Partner shall ensure that along
with the Offer Shares, the proposed third party purchaser also acquires
the shares specified in the Tag Along Notice for the same consideration
and upon the same terms and conditions as applicable to the Offer
Shares.
(c) In the event that the proposed third party purchaser is
unwilling or unable to acquire all of the Offer Shares and the
Government's equity shares mentioned in the Tag Along Notice, upon such
terms then the Strategic Partner may elect either to cancel proposed
transfer or to allocate the maximum number of equity shares of the
Company which the proposed third party purchaser is willing to purchase
among the Sale Shares and the shares mentioned in the Tag Along Notice
pro-rata in the ratio of equity shareholding in the Company at such
time of the Strategic Partner and the Government and to complete such
transfer on such terms.
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(d) Notwithstanding anything to the contrary in this Agreement,
the Strategic Partner shall not be entitled to sell or transfer any of
the Offer Shares to any proposed purchaser / transferee unless the
proposed purchaser / transferee simultaneously purchases and pays for
the required number of equity shares mentioned in the Tag Along Notice
in accordance with the provisions of this Article 6.3.
6.4 EVENT OF BANKRUPTCY OF THE STRATEGIC PARTNER
(a) If an Event of Bankruptcy occurs in relation to the Strategic
Partner, the Strategic Partner shall give notice of such Event of
Bankruptcy ("Bankruptcy Offer Notice") to the Government within 15
Business Days of such Event of Bankruptcy, offering to sell all, but
not less than all, of the voting Equity Shares beneficially then owned
by the Strategic Partner and its Affiliates to the Government or its
nominee at Fair Value as determined pursuant to Article 6.7 (b).
(b) Within 60 Business Days of the Fair Value being determined in
accordance with Article 6.7 (for the purposes of this Article the
"Offer Period") the Government may give to the Strategic Partner, with
a copy to the Company, a notice in writing exercising its right to
purchase or cause its nominee(s) to purchase the voting Equity Shares
under this Article 6.4 (a "Bankruptcy Acceptance Notice"). If the
Bankruptcy Acceptance Notice is given by the Government, the
transaction of purchase and sale shall be completed within 60 Business
Days of the expiry of the Offer Period.
(c) Upon the completion of the purchase of the Strategic Partner
shares by the Government or its nominee(s) pursuant to this Article
6.4, the Government shall be constituted as successors in interest of
the Strategic Partner to the extent of the equity shares of the Company
held by the Strategic Partner and the Government and / or its
nominee(s) as the case may be, shall be entitled to succeed to, and be
transmitted as a successor Shareholder on the register of members of
the Company.
6.5 PERMITTED TRANSFERS
(a) Any Securities held by the Strategic Partner may be
Transferred to a Person who is an Affiliate of the Strategic Partner
provided that, in connection with any such Transfer (i) the transferee
shall, in writing, assume all rights and obligations of the transferor
under this Agreement, and (ii) effective provision is made whereby the
transferee and the transferor are bound, prior to the transferee
ceasing to be an Affiliate of Strategic Partner to effect the Transfer
back to the Strategic Partner, of all (but not less than all) such
Securities held by the transferee.
(b) Notwithstanding the completion of any Transfer by the
Strategic Partner to an Affiliate pursuant to this Article 6.5, the
Strategic Partner shall continue to be bound by all the obligations
under this Agreement as the principal obligator.
6.6 CALL OPTION
(a) The Parties hereby agree that upon the expiry of the fourth
anniversary of the Closing, for a period of one year thereafter, the
Strategic Partner shall have the option to issue a notice ("Call
Notice") to the Government, thereby requiring the Government to sell to
the Strategic Partner within a period of 30 (thirty) days from the date
of
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determination of Fair Value (the "Call Period"), of all but one voting
Equity Shares in the Company then held by the Government, (the "Called
Shares") and the Government in that event shall be under mandatory
obligation to sell the Called Shares as aforesaid. The price for the
sale and purchase of the Called Shares pursuant to this Article shall
be the Fair Value of the Called Shares as determined in accordance with
Article 6.7 of this Agreement;
(b) The Parties shall cause the Fair Value of the Called Shares to
be determined within 60 (sixty) days of the date of receipt of the Call
Notice.
(c) If the purchase, pursuant to the Call Notice, is not completed
by the Strategic Partner, the Government shall be relieved of its
obligations to sell the Called Shares specified in Article 6.6 herein.
For the avoidance of doubt, other than the right of first refusal
provided in Article 6.2 and the tag along rights provided in Article
6.3, there shall be no restriction on the right of the Government to
Transfer any or all of its Shares till such time that the Call Notice
is received by the Government.
6.7 DETERMINATION OF FAIR VALUE
(a) The Fair Value for the purpose of Articles 6.2(f), 6.4(a), 6.6
and 6.8(a) shall be determined in accordance with Article 6.7 (b),
(b) For the purpose of Article 6.7(a) the Government and the
Strategic Partner shall appoint the Appraiser to determine the Fair
Value of the relevant voting equity shares of the Company. The
Appraiser shall determine the value of the equity shares in accordance
with the principles of valuation set forth in Schedule 6.7. The
Appraiser shall deliver its report to the Government and the relevant
Shareholder as soon as practicable, but in any event not later than 60
days after its selection as Appraiser. The valuation arrived at by the
Appraiser, made as an expert and not as an umpire or arbitrator, shall
be final and binding on the Parties and no appeal shall lie from such
valuation. All costs and expenses relating to the determination of the
Fair Value of any Transaction Shares of the Company pursuant to Article
6.7(b) shall be, unless otherwise expressly provided, shared equally
among the Government and the relevant Shareholder(s) provided that if
the sale or purchase of Equity Shares under this Agreement is pursuant
to a breach by either Party, then the defaulting Party shall bear the
entire cost and expenses relating to the determination of the Fair
Value of any voting equity shares of the Company pursuant to this
Article 6.7.
(c) The Parties shall cooperate in good faith with each other and
the Appraiser and shall use their best efforts to respond promptly to
any reasonable request by the Appraiser. Any projections and other
information concerning the business of the Company and its operations
and sales, whether historical or projected, submitted (or to be
submitted) to the Appraiser shall have been (or shall be) prepared in
good faith and in accordance with generally accepted accounting
principles consistent with the past practice of the Company.
6.8 CONSEQUENCES OF FUNDAMENTAL EVENT OF DEFAULT AND EVENT OF DEFAULT
(a) If the Strategic Partner commits any breach or default of the
terms of this Agreement or if there is an occurrence of an Event of
Default, which, if capable of being
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remedied, is not remedied within 60 days of receipt of notice of such
breach, or if there is an occurrence of Fundamental Event of Default,
the Government shall have the right, exercisable at its sole
discretion, at any time within 90 days of the day it became aware of
such breach or default (without giving any notice to remedy such
breach), to give notice (such notice being referred to in this Article
6.8 as the "Default Notice") to the Strategic Partner by the Government
to either:
(i) Sell all or any of the voting equity shares of the
Company held by the Government to the Strategic Partner (such
offer being referred to in this Article 6.8 as, an "Right to
Sell") at a price that is equivalent to 125% of the price of
such equity shares determined in accordance with Article 6.7.
Provided however, that the event of breach committed by the
Strategic Partner is a Fundamental Event of Default, the price
at which the Government will have the right to sell its Equity
Shares to the Purchaser shall be 150% of the price of such
equity shares determined in accordance with Article 6.7.
(ii) Purchase, directly or indirectly, through a
designated nominee, all or any of the voting equity shares of
the Company held by the Strategic Partner or its Principal(s)
or its Affiliates (such offer being referred to in this
Article 6.8 as, an "Right to Purchase") at a price that is
equivalent to 75% of the price of such shares determined in
accordance with Article 6.7. Provided however, that the event
of breach committed by the Strategic Partner is a Fundamental
Event of Default, the price, at which the Government will have
the right to buy the Equity Shares then held by the Strategic
Partner or its Principal(s) or its Affiliates shall be 50% of
the price of such equity shares determined in accordance with
Article 6.7.
(b) Within 30 Business Days of the Default Notice being given
containing the Right to Sell or the Right to Purchase, as the case may
be, the Strategic Partner shall complete the transaction of the
purchase and sale.
(c) The Strategic Partner shall be liable for all costs and
expenses (including reasonable legal fees) including, but not limited
to, those that the Government or its nominee may incur to complete the
transaction of sale and purchase pursuant to this Article 6.8 and
comply with the applicable rules and regulations of the Securities and
Exchange Board of India.
6.9 CLOSING FOR SALE AND PURCHASE
The closing of any purchase or sale of the Transaction Shares pursuant
to Articles 6.2, 6.4, 6.6 and 6.8 shall take place as provided in
Schedule 6.9 of the Agreement.
6.10 COMPLIANCE WITH LEGAL REQUIREMENTS
Notwithstanding any other provision of this Agreement to the contrary,
a Transfer will not be permitted without the making of all applicable
Notices and the receipt of all applicable governmental approvals and/or
authorisations as required by applicable Law or until the Board has
received such legal opinions, assurances or other evidence that such
74
Transfer complies with applicable Law and the terms of this Agreement
in all material respects as the Board deems appropriate in light of the
facts and circumstances relating to such proposed Transfer, together
with such representations, warranties and indemnifications from the
transferor and the transferee as the Board deems appropriate to confirm
the accuracy of the facts and circumstances that form the basis for
such opinion or other assurances and to protect the Company from any
liability resulting from any such Transfer.
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