Out of the 12 special resolutions, shareholders rejected nine resolutions connected with entities related with USL chairman Vijay Mallya

Minority shareholders of United Spirits Ltd (USL) defeated a majority of the special resolutions during the company's extraordinary general meeting on 28th November at Bengaluru. This is seen as a major setback to the integration between the company and its new owner Diageo Plc. Out of the 12 special resolutions, shareholders rejected nine resolutions connected with entities related with USL chairman Vijay Mallya.

In a regulatory filing, USL said, a key resolution regarding approval of a loan agreement between USL and UB Holdings Ltd has not been approved by the shareholders. Another resolution regarding sale of immovable properties to USL by UB Holdings also did not find favour with the shareholders. These resolutions required approval from at least 75% of shareholders. During the voting, only 127 public shareholders participated, suggesting that institutions had a major role to play in the defeat of the majority of the resolutions.

The company said, due to Securities and Exchange Board of India (SEBI), regulation for prohibiting related entities to participate in the voting, USL promoters did not participate in the process. This includes Relay BV, which owns 54.78% stake, United Breweries Holdings, Kingfisher Finvest India, and others who together hold 4.09% in USL.

UB Holdings, Kingfisher Finvest India, Devi Investments, Rossi and Associates and Vittal Investments, however, exercised their votes in favour of the resolutions at item no 2 related to approval of sales promotion agreement between USL and Diageo and item no 11 related to approval of properties call agreement between USL and PE Data Centre Resources Ltd. The filing said the scrutiniser has invalidated the votes by these entities. It also said the company will investigate the validity of the votes exercised by these entities.

Resolutions passed by USL shareholders include erosion of net worth of the company, sales promotion agreement and trademark licence agreement.

Resolutions that were rejected by the shareholders are:

3. Loan agreement between the company and UBHL (voted against: 44.12%).

5. Agreement between the company and UBHL to sell to the company certain immovable properties (27.12%).

6. Agreement with Kingfisher Fiinvest India. (77.17%).

7. Advertising agreement with Watson Ltd. (58.78%).

8. Sponsorship agreement between the company and United Racing & Bloodstock Breeders. (58.25%).

9. Sponsorship between the company and United Mohan Bagan Football team (32.69%)

10. Aircraft services between the company and UB Air Pvt Ltd. (77.53%)

11. Properties call agreement between the company and PE Data Centre Resources (75.52%).

12. Contribution agreement between the company and Vittal Mallya Scientific Research Foundation. (47.48%).