Win for small shareholders of Linde India
A small group of minority investors has been taking on Linde India, a listed company, for allegedly unfairly allocating a potentially lucrative business to its unlisted joint venture partner for almost five years. After much back and forth, these investors seem to have gotten some success. The Securities Appellate Tribunal (SAT) directed Linde to cooperate with a valuation exercise the Securities & Exchange Board of India (SEBI) had ordered, which the company appealed against before multiple fora including the Supreme Court in September last year. The company did not get any relief from the court.
Linde India, a subsidiary of Linde Plc, is an industrial gases and engineering company. The minority investors particularly have concerns about Linde giving away, “without doing a proper valuation”, the hydrogen value chain business to Praxair India Private Limited (PIPL) when it signed a joint venture agreement with the latter. The minority investors have also alleged Linde India’s failure in obtaining shareholder approval for material-related party transactions, considering PIPL was a ‘related party’ of Linde as globally Linde AG and Praxair Inc had merged in 2018 to create Linde Plc.
Minority shareholders constitute 25 percent of the company.
If these business allocation transactions as part of the joint venture are found to be material-related party transactions—that is more than 10 percent of sales in the year the joint venture agreement was signed—only minority shareholders can approve the arrangement.
Linde, formerly BOC India Ltd, has been listed on the NSE and BSE since June 1999. It is engaged majorly in two businesses—gases and related products, which includes the sale and manufacture of industrial, medical, special gases and related equipment; and project engineering that involves manufacturing and sale of cryogenic and non-cryogenic vessels as well as designing, supplying, testing, erecting and commissioning of projects across diverse industries.
