Chanda Kochhar, chief executive officer of ICICI Bank Ltd. (Photographer: Simon Dawson/Bloomberg)

ICICI Securities AGM: Chanda Kochhar Holds On To Board Seat

Chanda Kochhar won the resolution for her reappointment as director on the board of ICICI Securities Ltd. with a comfortable margin. The resolution was put to vote on Aug. 30 at the company’s annual general meeting.

According to data filed by the company with stock exchanges - of the total 27.98 crore votes cast, 97.68 percent were in favour of the resolution to re-appoint her. That’s because parent ICICI Bank Ltd., that owns 79.22 percent stake in the broking arm, voted in her favour. The bank constituted 91 percent of the total votes cast.

Kochhar also received considerable support from public investors. 73.6 percent of the institutional votes cast were in favour of her reappointment. Among public shareholders present and voting, 79.3 percent backed her.

Kochhar needed 51 percent of the votes cast for the resolution to pass - and she got 100 percent of the promoter vote and 73 percent of the non-promoter vote.

It’s worth noting here though that only half the institutional votes were exercised. Of the total 5.11 crore shares owned by this segment, votes were cast only on 2.45 crore shares. The percentage of non-institutional public shareholders casting votes was much, much lower. Of the total 1.58 crore shares owned by this segment votes were cast only on 35,694 shares.

Votes Cast In Favour Of Chanda Kochhar’s Reappointment

  • Promoter: 100%
  • Institutional Shareholders: 73.64%
  • Public Shareholders: 79.35%

Kochhar, managing director and chief executive officer of ICICI Bank, is on leave pending an independent probe into a whistleblower’s allegations of impropriety. Kochhar faced allegations of possible quid pro quo in loans granted by ICICI Bank to the Videocon Group, in light of the dealings between Venugopal Dhoot and NuPower Renewables—founded by her husband Deepak Kochhar. Parallel investigations are being carried out by the Central Bureau of Investigation, Indian market regulator SEBI and U.S. securities regulator SEC. As yet no wrongdoing has been established.

Governance advisory firm IiAS had recommended shareholders to vote against Kochhar’s reappointment at ICICI Securities. Pointing out that Kochhar is under investigation for her loan sanction decisions at ICICI Bank, the advisory firm said her presence on the subsidiary’s board “exposes the company to the same risks and the possibility of legal and regulatory sanctions”.

Advisory firms Institutional Shareholder Services and Stakeholders Empowerment Services, however, had asked shareholders to vote in favour as the allegations against her have not been proved yet.

Also read: ICICI Securities AGM: To Vote Or Not To Vote For Chanda Kochhar

The Dilemma

The resolution to reappoint Kochhar as director on the ICICI Securities board, while routine as per company law, had put parent ICICI Bank Ltd. in an interesting position.

In dealing with the situation arising from these allegations, ICICI Bank has so far preferred to maintain status quo on Kochhar’s leadership. Soon after a newspaper report, on Mar. 29, detailed suspicious transactions between Kochhar’s husband and Videocon, the bank’s board issued a statement saying it has full confidence and reposes full faith in Kochhar. Almost three months later, when faced with more whistleblower letters and mounting criticism, the bank’s board appointed Sandeep Bakshi as chief operating officer for five years. Kochhar went on leave, ostensibly to ensure a free and fair inquiry. But she continued as managing director and chief executive officer of the bank and has retained her position as chairman of key subsidiaries such as ICICI Prudential Life Insurance Company Ltd., ICICI Lombard GIC Ltd., ICICI Prudential Asset Management Company Ltd. and ICICI Securities Ltd.

In voting for her reappointment as director on the ICICI Securities board, the bank, many might say, is simply continuing that policy of status quo.

But Kochhar’s position on the board of ICICI Securities is on account of her leadership role at ICICI Bank. When that very role is under cloud, should the parent persist in allowing her to continue a board leadership position in the subsidiary? Some might say the status quo principle would apply if the bank took no action to dismiss her from the board. But if, when faced with an active choice to vote for or against her, the bank votes for her—can that still be described as maintaining status quo? Or is it an affirmation of faith in her leadership even before the investigation result is in?