It is also a matter of fact worth mentioning that more details are trickling in on the end use of funds raised through pledging of shares by promoters of companies. Most known pledging their shares as collateral to raise working capital or a term loan, to increase their holding or to fund an acquisition as a multinational had done to buy an Indian company. In February 2006, Germany based Group of MHM, also known as Huber Group, acquired a seventy per cent chance in Vapi based ink manufacturer Micro Inks for Rs thirteen hundred. On Tuesday, MHM Holdings disclosed to stock exchanges that it was accountable pledging its whole stake in Micro Inks.
These shares pledging by the Huber Group as collateral with its banks to fund the acquisition as said by Micro Inks MD Ashwani Bharadwaj. An official clarified the fact that the banks cannot advertise these shares. Companies are rushing to make disclosures on pledging of shares by their promoters after market regulator Securities and Exchange Board of India made it mandatory. Sebi has asked promoters to reveal details of pledged shares if the same exceeds twenty five thousand shares in a quarter or one per cent of the total shareholding or voting rights of the company, whichever is considered as inferior.
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It is a matter of fact worth mentioning that Promoters of many listed companies have raised finances by pledging their shareholdings. When they are in the process of pledging their shares, they are known pledging their voting rights as well. As a result of this there is no doubt about the fact that it is known to become a risk factor too. And deliberating of such positions has the potential of deteriorating the review of the corporation. There us always a chance of doing that because of pledging.
It is a matter of fact worth mentioning that Promoters of many listed companies have raised finances by pledging their shareholdings. When they are in the process of pledging their shares, they are known pledging their voting rights as well. As a result of this there is no doubt about the fact that it is known to become a risk factor too. And deliberating of such positions has the potential of deteriorating the review of the corporation. There us always a chance of doing that because of pledging.
