Yes Bank’s Promoters Bury The Hatchet, Appoint Shagun Gogia To Board
After years of in-fighting and litigation, the promoters of Yes Bank Ltd. buried the hatchet and appointed Shagun Kapur Gogia as one of the representative directors of the Indian partners of the bank.
Gogia's appointment, according to the bank’s statement to the stock exchanges on Friday, is effective immediately and she will not be liable for retirement by rotation.
Gogia received the joint nomination of Yes Bank's Co-Founder and former Managing Director and Chief Executive Officer Rana Kapoor as well as her mother Madhu Kapur, who inherited the promoter holding from her late husband Ashok Kapur.
The private sector lender, in its stock exchange notification, said that Ravinder Kumar Khanna has also been added as a non-executive, non-independent director on the board after joint nomination from both promoter families
Indian promoters have the power to jointly nominate one more director on Yes Bank's board. The promoters, however, are yet to decide on who the third director would be, a person with direct knowledge of the matter told BloombergQuint on condition of anonymity.
The Kapoor and Kapur families have been fighting a legal battle since 2013, where Madhu Kapur claimed that after her husband's death, Gogia should have been given a seat on the bank's board. However, Rana Kapoor, who was then heading the bank, as well as members of the board held the view that she did not have the requisite experience.
The case continued till 2015, when the Bombay High Court ruled in favour of the Kapur family by saying that the promoters must jointly nominate three directors on the board. This gave Madhu Kapur more say in the bank's board appointments.
While the case was being appealed by Yes Bank's leadership, the Reserve Bank of India, in 2018, asked the board to reconsider Rana Kapoor's reappointment as MD & CEO of the bank.
While the regulator did not specify what adverse observations it had made against Kapoor for stopping his reappointment, people privy to the matter have stated that this was due to two consecutive years of under reporting of bad loans by the bank.
In September 2018, Yes Bank informed stock exchanges that the board had decided to rescind its request for Kapoor's reappointment and that he would demit his office by Jan. 31, 2019, as ordered by the RBI. In the same announcement, the bank's board had said that it had decided to elevate top officials Rajat Monga and Pralay Mondal as executive directors on the board. Mondal eventually left to join rival Axis Bank Ltd. as the retail head.