Al-Rumayyan's Appointment Not Connected To Aramco Deal, Says Reliance After CalSTRS Resistance
Reliance Industries Ltd. has said Saudi Aramco Chairman Yasir Al-Rumayyan's appointment as an independent director on its board has no connection with the contemplated deal with the Saudi oil company.
Al-Rumayyan satisfies all "stringent criteria" laid down in the law for appointment as independent directors of a listed company, Reliance said in its disclosure to stock exchanges and a communication to proxy advisory firms. The board's human resources, nomination and remuneration committee, comprising four independent directors of a total strength of five, had recommended the appointment unanimously "considering his versatile experience", it said.
The clarification comes days after BloombergQuint reported that the California State Teachers Retirement Fund or CalSTRS decided to vote against the appointment of Al-Rumayyan, likely based on the recommendation of international proxy advisory firm Glass, Lewis & Co.
Glass, Lewis had pointed out that Al-Rumayyan serves as the governor of the Public Investment Fund, an entity within the Saudi Arabian government and an adviser to the General Secretariat of the Cabinet of Ministers of Saudi Arabia, apart from being a chairman of the company that Reliance is currently in discussion with to sell 20% of its oil-to-chemicals division. Hence, the proxy advisory firm raised concerns about him being designated as independent director.
Reliance had appointed Al-Rumayyan as an additional director on July 19 and the shareholder vote to confirm him as an independent director for three years ends on Oct. 19.
In its filing, Reliance has said that Al-Rumayyan's appointment will “help strengthen the board’s diversity and skillsets and benefit Reliance through the transition from oil-to-chemicals and the aim to achieve net carbon zero by 2035".
The oil-to-chemicals business is being spun off to a subsidiary and as per the terms of the proposed transaction, Saudi Aramco will participate in the equity of the oil-to-chemicals subsidiary, it said. "The oil-to-chemicals subsidiary board may have nominees of Saudi Aramco to protect its interest."