Cairn shareholders ask India to honour arbitration award
Cairn, which on this day seven years back was first slapped with a retrospective tax assessment, is three-fourth owned by world's top investors with $529 billion MFS Investment Management of US being its largest investor with 14.02% stake
New Delhi: Some of Cairn Energy Plc’s marquee shareholders that include BlackRock, MFS, Franklin Templeton and Fidelity, have asked Indian government to honour an arbitration award and return $1.2 billion to the British oil firm, sources said.
Cairn, which on this day seven years back was first slapped with a retrospective tax assessment, is three-fourth owned by world’s top investors with $529 billion MFS Investment Management of US being its largest investor with 14.02 per cent stake.
New York-based BlackRock is the second biggest shareholder with 12.19 per cent stake. Other investors include Fidelity International, Franklin Templeton, Vanguard Group and Aberdeen Standard Investments, according to stock exchange data.
Two sources with knowledge of the development said the investors have written to the Indian government as well as the governments of their country – the US and the UK – seeking adherence to the award of a tribunal at the Permanent Court of Arbitration in The Hague.
The three-member tribunal, which comprised a judge appointed by India, last month unanimously overturned a Rs 10,247 crore retrospective tax demand on the British oil and gas company and asked the government to return value of the shares it sold, dividend it seized and tax refunds it stopped to enforce the tax.
Sources said Cairn is not a single-promoter driven firm but is owned by world’s top investors who are now seeking to protect their interest. These investors, they said, have patiently waited for seven years for resolution of the issue and now that an international arbitration award has come, they want it to be honoured and the issue resolved in a time-bound manner.
Cairn’s international shareholders who hold more than 30 per cent of the stock, in the US and the UK have engaged with their governments as well as the Indian authorities seeking resolution of the issue in a timely fashion. It wasn’t immediately known how many of the Cairn’s top 20 shareholders, who between them hold 74.94 per cent stake, have written to the US, the UK and the Indian government.
The tribunal ordered the government to return the value of shares it had sold, dividends seized and tax refunds withheld to recover the tax demand along with interest. Also, it was asked to reimburse the cost of arbitration. All this totalled to $1.25 billion plus interest.
