ADAG threatens Mukesh camp with legal action

Our Corporate Bureau
07 February 2006

ADAG has also alleged that the Mukesh Ambani group is trying to corner shares in these companies by re-materialising them into physical form.

Top executives of ADAG are understood to have written letters to the Mukesh Ambani camp, depository participants and merchant bankers handling the process, threatening them with criminal proceedings if the shares are re-materialised.

The stakes held by the Ambani family in the four de-merged companies were supposed to have been transferred to ADAG. While ADAG is claiming immediate transfer of the shares and management control, Reliance Industries wants the companies to be listed before transferring management control.

It is learnt that the Mukesh camp has transferred around 24 per cent each in the four companies to ADAG. However, ADAG claims that based on the family holdings, around 37 per cent shares in these companies should have been transferred to it.

ADAG now says the Mukesh Ambani camp is also trying to re-convert part of the family stake in these four companies into physical shares. It is reported that an irrevocable power of attorney was given to ADAG by the Mukesh Ambani camp for transferring the shares in demat form to ADAG. If the shares are converted into physical form, the power of attorney would have no value, as the physical possession of the shares continue to be with the elder brother's group, says ADAG.

The whole controversy is further complicated by the complete lack of transparency in the whole process and the complex holding structure of the group. For example, it is claimed by the Mukesh camp that ownership and control of no less than 200 different companies holding equity stakes in Reliance Infocomm have been transferred to ADAG.