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Amazon Warns Future Retailers Against Holding Shareholders’ Meeting On Asset Sale To Reliance Retail


Amazon warned Future Retail to hold a shareholders ’meeting to approve the sale of assets to Reliance Retail

New Delhi:

Amazon has warned Future Retail Ltd (FRL) not to hold a meeting of its shareholders and creditors next week to approve the sale of its retail assets to Reliance Retail owned by billionaire Mukesh Ambani.

In a 16-page letter to Kishore Biyani and other organizers on April 12, the U.S. e-commerce giant said such meetings were illegal and would not only violate the 2019 deal when Amazon invests in the FRL organizing firm but also violate an arbitration tribunal injunction Singapore on the sale of retail assets to Reliance.

A letter signed by a representative of Amazon.com NV Investment Holdings LLC asked the Biyani group to comply with an injunction issued by the Emergency Arbitrator and “ensure no further steps are taken to proceed” with the transaction.

Future held a shareholders ’meeting on April 20 and a creditors meeting on April 21 to seek their approval for the proposed Rs 24,713 crore deal with Reliance.

The move follows a Feb. 29 order from the National Company Law Tribunal (NCLT), in line with the Feb. 15 Supreme Court order, which allowed Future Group companies to hold shareholders and creditors meetings.

Amazon, however, believes such meetings are illegal.

“Any attempt to override an injunction and attempt to vote based on false documents, given Amazon’s category denial that it did not give its consent to a director of Future Coupons Pvt Ltd (FCPL) or any FCPL representative or the Organizer would be tantamount to knowing of false documents with intent to cheat and defraud, which will cause all parties, whether acting directly or abetting the act to be liable to legal action, ”he said.

Amazon opposed Reliance’s offer in August 2020 to buy Future Retail stores and warehouses for Rs 24,713 crore on the grounds that the deal violated the 2019 agreement through which it acquired a 49 per cent stake in FCPL, Future Retail’s promoter entity, for about Rs 1,500 crore.

It has dragged Future into arbitration and in court to block the Reliance deal.

Reliance in late February quietly began taking over the rental leases of hundreds of stores once operated by Future Retail and Future Lifestyle Fashions Ltd amid legal action and arbitration across India and Singapore.

“It is emphasized that any act of voting in favor of this scheme or any move in continuing or assisting the scheme without Amazon’s permission by any director, authorized representative, proxy or agent on behalf of the organizer, organizing entity or FCPL will be considered a manifest violation performed by the organizers and FCPL against valid and binding injunctions operating against them, ”Amazon wrote.

The US giant said FCPL and FRL organizers were not allowed to take any steps to proceed with the Reliance deal as the Delhi High Court had not approved any order allowing any shareholders ’and creditors’ meetings to be held.

“In terms of the FCPL (SHA) and FRL SHA shareholders’ agreements (both agreements have been executed by the organizers and FCPL), various agreements and commitments have been given by the organizers, including that they will remain under the management and control of the FRL.

“Further, pursuant to the aforementioned agreement, FRL’s retail assets have been entrusted to the organizer on the express condition that the retail assets may only be disposed of in the manner prescribed under the agreement, and in any case, never to the restricted person,” he said.

Reliance, according to Amazon, is categorized as a banned person.

“Further, as part of the terms of the trust, the organizer and FCPL promise not to act without Amazon’s consent with respect to any of the matters mentioned in the agreement,” he said, adding that Amazon does not agree to, or approve, any transaction involving restricted transactions. people.

“It is asserted that the proposed transaction with the Mukesh Dhirubhai Ambani Group resulted in the cessation of operations and the existence of the FRL itself as well as the transfer of FRL’s retail assets to blocked persons, which denies Amazon’s investment fundamentals and protection and material rights,” it wrote.

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