India: Heineken unable to remove Mallya from United Breweries

Despite owning 42.4% of Indian market leader United Breweries, Dutch brewer Heineken is unable to remove chairman Vijay Mallya. The Indian billionaire, who fled last March to England to escape creditors and Indian tax authorities, is causing reputational risks to United Breweries and its flagship brand Kingfisher.

The Articles of Association between Heineken and Mallya, which were concluded in 2009 when Heineken acquired a 37.5% stake in UBL, states that Mallya will be entitled to be the lifelong chairman unless he voluntarily steps down. Even after hiking its stake in the company to 42.4% in recent years, Heineken, which also has the first right of refusal, does not have the right levers to remove Mallya from the board.

Viajya Mallya became chairman of United Breweries Group in 1983 at the age of 28, following his father's death and has since then grown the company into a multi-national conglomerate of over 60 companies.

Though Mallya is wanted by the law, there is a professional team running the organization and Heineken is already in the driver’s seat. It seems to be only a matter of time and extra money, to make Mallya voluntarily step out of the business, until the “Indian problem” will be resolved for Heineken.

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