The acquisition of stake by UB Group, which owns Kingfisher Airlines, in Deccan Aviation is facing turbulent weather.
The Ministry for Corporate Affairs (MCA) has issued a show-cause notice to the acquirer (UB Group) for non-compliance with the provisions of the Companies Act.
A senior Corporate Affairs Ministry official told Business Line that notice has been issued seeking explanation as to why the provisions of the Act have not been complied with. The Act prescribes that if post-acquisition the market share of the two entities combined exceeds 25 per cent the corporate concerned needs prior approval of the Union Government,. The official said that the notice was issued by the southern region field office of the Ministry.
In May last year, the UB Group through Kingfisher Radio Ltd and UB Overseas Ltd had acquired stake in Deccan Aviation that ran the low-cost airline Air Deccan.
The UB Group had acquired 26 per cent stake in Deccan Aviation and subsequently acquired 20 per cent more. As on quarter ended March 2008 Kingfisher Radio Ltd held 42.57 per cent stake and UB Overseas held 7.19 per cent stake in Deccan Aviation.
