According to records, SHCIL Services Ltd was never a subsidiary of Stock Holding Corporation of India Ltd. The first complaint filed by the finance ministry to the ministry of company affairs mistakenly mentions it as a 100 per cent subsidiary. However, the petition filed by Stock Holding Corporation with the Company Law Board in May has refrained from using the word subsidiary, preferring to call it an associate.
On April 13, the board of directors of Stock Holding Corporation, asked Chairman R Jayaraman Iyer to go on leave and he was removed from the company on June 20. The finance ministry had complained that the Stock Holding Corporation stake in SHCIL Services was diluted without approval of the company’s board and that Iyer was responsible for it.
SHCIL Services had been started in 1995 with seven employees of Stock Holding Corporation as shareholders. All public companies have to start in this manner. However, when the intention is to form a subsidiary, it is the norm to mention the parent company as the beneficiary alongside the names of the seven shareholders.
RK Bansal, the wholetime director of Stock Holding Corporation, who has been handed the unenviable task of clearing the mess at the company, says: “I do not know why the name of the company was not mentioned alongside the names of the seven employees. It should have been.”
The annual reports of Stock Holding Corporation also do not mention SHCIL Services as a subsidiary. The company was revived in 2005 to be used as a vehicle for entry into the broking business.
SHCIL Services saw investments coming in from Nilanchal Capital Pvt Ltd, Stock Holding Corporation itself and E-ventures Capital Pte Ltd of Singapore. Documents with Hindustan Times show that the SHCIL Services board allotted 150,000 shares to Nilanchal Capital on July 2 and another 100,000 shares to Stock Holding Corporation on July 5. At this point, the company became a subsidiary of Nilanchal Capital.
All board members of SHCIL Services were employees of Stock Holding Corporation. Thereafter, in January 2006, the company’s board introduced E-ventures of Singapore and Padma Subramanian and V Subramanian as new shareholders.
“Stock Holding Corporation has the right to appoint five directors on the board of SHCIL Services and we have just done so. This indicates that there was always the intention of making this a subsidiary,” Bansal adds.
“We have a Company Law Board order that says we can revert back to the shareholding of 2005, when there were seven shareholders. But it may not solve the tangle. We are looking at whether we can buy out the other shareholders,” Bansal adds.