'Enemy' shares to be dematerialised
Office of the Custodian of Enemy Property holds both immovable property and securities; dematerialisation is expected to be completed in a few months
A shareholder whose physical share certificates arguably constitute some of the longest-held investments on Dalal Street is finally dusting these for dematerialisation, more than 40 years after the wars that resulted in their transfer of ownership.
The owner of these certificates, the Office of the Custodian of Enemy Property, is entrusted with properties that include share certificates seized after the 1962 war against China and those against Pakistan in 1965 and 1971. Most of these holdings are said to be of people who were Pakistani nationals at that time.
Two people familiar with the matter said dematerialisation of these assets was already underway. While they did not comment on the value of the securities, these are reportedly worth about Rs 10,000 crore.
According to a 1971 estimate, the original value of the holdings was only Rs 29.4 crore.
No records were available on the exact holdings. A Business Standard report a few years ago mentioned a number of these - Wipro, Tata Steel, Tata Power, Tata Chemical, Tata Coffee, Tata Engineering, Nelco, Unit Trust of India schemes, Shaw Wallace, United Breweries, Birla Corporation, Grasim Industries, ACC, India Cements, Digvijay Cement, Hindustan Lever, State Bank of Bikaner and Jaipur, State Bank of Hyderabad, NEPA Mills, Poddar Mills, Kohinoor Mills, Phoenix Mills, JK Synthetics, Cipla and Ashok Leyland.
The Office of the Custodian of Enemy Property, under the Ministry of Home Affairs, has an office in Mumbai and a branch in Kolkata. It is governed by the Enemy Property Act of 1968.
One of the people mentioned earlier said dematerialisation of these assets was likely to be completed "in a few months", adding the move might be aimed at preserving these records, considering the fact that physical certificates would have undergone wear and tear since the Enemy Property Act came into effect. The second person said he had seen a communication in this regard.
An official at the Office of the Custodian of Enemy Property confirmed the process was underway. He said the move was aimed at maintenance, adding the office wasn't allowed to divest such securities.
"The enemy property shall continue to vest in the Custodian till it is divested by the central government…enemy property can be divested only to the owner or his lawful heir," said an October 2010 government statement, amending the laws governing such securities. "The central government is authorised to direct the Custodian to sell or dispose of enemy properties in such manner as may be prescribed."
An email sent to the Ministry of Home Affairs did not receive a reply.
Fresh news reports in February this year indicated the ministry had notified rules under the Enemy Property Act to identify and take control of such assets.
Other than shares and other such securities, the Office of the Custodian of Enemy Property was also in charge of 2,111 immovable properties as of May 5, 2011, according to a reply in the Lok Sabha. In 2011-12, it received about Rs 40 crore, including "dividend on shares/stocks and income on investments made in government securities and treasury bills".
For such land and buildings, district authorities are entitled to retain 1/12th of the income for management and maintenance expenses.
'ENEMY' OF THE STATE
Office of the Custodian of Enemy Property holds both immovable property and securities
These belong to an enemy country, or companies or people belonging to such a nation
Assets were vested with the custodian after the wars of 1962 (with China), 1965 and 1971 (both with Pakistan)
Process of dematerialisation is underway and is expected to be completed in a few months
The government had estimated the value of the share certificates and properties to be Rs 29.4 crore in 1971
They throw up more than Rs 40 crore only in income every year now, including dividends and rents
Shares are said to include those of blue-chips, including Tata Steel, Wipro
Value of all these shares is estimated to be over Rs 10,000 crore
Source - http://www.business-standard.com/article/markets/enemy-shares-to-be-dematerialised-115041700037_1.html
