Religare Enterprises Ltd chairperson Rashmi Saluja informed shareholders at the company’s annual general meeting (AGM) on Friday that investors could not vote on her continuation for now as she was not retiring as a director, a move that stumped shareholders and proxy advisory firms.
After opening remarks by the management, shareholders convened to vote on three resolutions, including Resolution No. 2 on Saluja’s reappointment as a director.
According to a draft copy of the AGM proceedings that Religare shared with the stock exchanges, Saluja said, “[A]s per the 2nd resolution I don’t offer myself for re-appointment as I am not liable to retire by rotation.”
At this point, P.K. Tripathi, one of the four independent directors, intervened to request that the shareholders be allowed to vote.
“I would also like to state that the Board is committed not only to support the Management but also to support the stakeholders. Therefore it is the duty of the Board to ensure the AGM is held and the Agenda for the AGM is discussed,” Tripathi said, according to the draft of the minutes. “The nutshell is the right of the stakeholders to exercise their vote on the agenda cannot be taken away.”
Saluja’s move was unpexpected, as multiple court appeals had been filed since December seeking a stay on the shareholder meeting. The first was by an investor before the Jabalpur bench of Madhya Pradesh High Court and the second by another minority investor in the Delhi High Court. Finally, Saluja also sued the company she heads, asking the Delhi High Court to stay the AGM proceedings. All of these interventions were made because Saluja ran the risk of being ousted as a director of the company.
In the high court, Saluja’s lawyer had argued that the AGM agenda violated her contractual tenure, which is secured until 2028, and the conditional Reserve Bank of India (RBI) approval given on 9 December 2024.
The courts, however, declined to offer any relief.
Religare’s five-member board includes Saluja, Tripathi, Malay Sinha, Ranjan Dwivedi and Preeti Madan. Other than Saluja, all others are independent directors.
“[I]t is a very, very important AGM for multiple reasons,” Saluja said, as she, along with the independent directors presided over the shareholder meeting from Religare’s office in Delhi.
At the same time, investors had logged into the proceedings virtually. This decision by Saluja implied that Religare’s shareholders could not vote on her reappointment on Friday. However, most investors had cast their vote on the three resolutions using the electronic voting facility between Tuesday and Thursday.
Religare said the voting outcome would be announced before Sunday evening. On Tuesday, around a third of Religare’s investors told Mint that they had voted against Saluja’s reappointment as director.
Emails sent to Saluja and Religare remained unanswered.
“In 2022 and 2023, her (Saluja) appointment as a director who retires by rotation was tabled before shareholders. Shareholders approved it. So, my question is why she is objecting to her reappointment this year,” wondered Amit Tandon, founder and managing director of Institutional Investor Advisory Services (IiAS), a proxy advisory firm.
Manendra Singh, partner at law firm Economic Laws Practice outlined the chairman’s role at shareholder meetings.
“Under the Companies Act, 2013, the chairman is mandated to ensure that the meeting is duly constituted in accordance with the Act and the Articles or any other applicable laws, before it proceeds to transact business. The chairman shall then conduct the meeting in a fair and impartial manner, and ensure that only such business as has been set out in the notice is transacted. The chairman shall regulate the manner in which voting is conducted at the meeting, keeping in view the provisions of the Act,” Singh said.
Singh, however, noted that in an event where chairman is the interested party in any item of business, “without prejudice to his voting rights on resolutions, he shall entrust the conduct of the proceedings in respect of such item to any non-interested director or to a member, with the consent of the members present, and resume the chair after that item of business has been transacted.
However, the power to regulate meeting does not explicitly provide that voting rights of members can be taken away from an agenda item. In fact, any resolution proposed for consideration through e-voting shall not be withdrawn,” Singh added.
Competing takeover
Earlier on Friday, the Supreme Court directed Digvijay “Danny” Gaekwad to deposit ₹600 crore in an escrow account by 12 February to prove the credibility of his counter-offer. Gaekwad first proposed a counter-bid to the billionaire Burmans’ ongoing open offer on 24 January.
Two days later, he raised the offer of ₹5,000 crore to buy up to 55% of shares. However, the Securities and Exchange Board of India (Sebi) returned his letter, as it did not conform to the regulator’s exemption application rules under the takeover code. This prompted Gaekwad to file a petition before the Supreme Court on Thursday.
A Bangkok-based investor, Sapna Govind Rao, also sought the Delhi High Court’s intervention, requesting that minority shareholders be allowed to evaluate Gaekwad’s higher open offer. The court declined to offer any relief to Rao.
Gaekwad claims his offer of ₹275 a share to buy up to 55% of Religare is better than the Burman family’s offer of ₹235 a share. In the letter to Sebi, he said his financial resources are readily available. He added that unlike the Burmans, his group has no other non-banking financial company, so it can give Religare its undivided attention and infuse capital.
Meanwhile, the Supreme Court directed Sebi to rule swiftly on the legality of the Burmans’ takeover timeline.
On 4 October 2023, the Burmans made the first public statement on their open offer. After much delay, the Burman family, which owns a little over 25% of Religare, got approvals from all regulatory agencies and made another announcement on 18 January to buy up to 26% shares from minority investors via an open offer that opened on 27 January.
It was to end on Friday, but following the hearing on Gaekwad’s appeal, the Supreme Court said the Burmans’ open offer cannot be closed until the Sebi decides on the legality of Gaekwad’s competing offer.
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