Reliance Industries' Shareholders Vote For Aramco Chairman As Independent Director
A majority of Reliance Industries Ltd.'s shareholders have voted in favour of the appointment of Yasir Othman H Al-Rumayyan as independent director on the Indian conglomerate's board.
Al-Rumayyan is the chairman of Saudi Aramco, that has been in talks for over two years to buy a substantial stake in RIL's oil-to-chemicals business. The proposal to appoint him as 'independent' director was opposed by the California State Teachers Retirement Fund, one of the world's largest institutional investors.
To be clear, CalSTRS held 53.07 lakh fully and partly paid shares of Reliance Industries valued at $119.5 million as of June 30, 2020, according to the last available disclosure on its website. That's less than 0.1% of the company's shares.
Most public institutional shareholders voted in favour of the appointment, according to an exchange filing. 86.57% of the public institutional shares were voted on and 94.9% of those were in favour whereas 5.1% voted against the proposal.
Among public non-institutional shareholders the voting turnout was low. 23.77% of shares in this category were voted on and almost all were in favour of the proposal.
Promoter Mukesh Ambani, chairman and managing director of RIL, and his family owns 50.59% of the company and, quite obviously, voted in favour of the proposal. Just those votes would have been sufficient to pass the "ordinary" resolution which needs only a simple majority in favour.
Al-Rumayyan: For And Against
Al-Rumayyan is the chairman of Saudi Aramco’s board of directors and the Governor of the Public Investment Fund, among the largest sovereign wealth funds in the world. He also serves as an advisor to the General Secretariat of the Council of Ministers, according to the Aramco website.
Given his extensive knowledge and experience in the oil and refining sector, his understanding of and position in the geopolitics of oil and global finance as well as his educational background, the appointment of Al-Rumayyan as an independent director is in the interest of the company, RIL said in its notice to shareholders.
But, Glass, Lewis, a U.S.-based proxy advisory firm, was concerned about conflict of interest, among other things.
In a detailed note, reviewed by BloombergQuint, the proxy advisory firm pointed out - "In this instance, the company has classified nominee Yasir Al-Rumayyan as being independent. However, given his connection with the Saudi Arabian government and the proposed business relationship between Saudi Aramco and the company, and absent clear disclosure regarding how he is considered to be independent, we will classify him as not being independent at this time."
It was basis this recommendation that CalSTRS is expected to have decided to vote against the proposal.
The American fund's opposition prompted RIL to issue a statement in defence of its proposal. Al-Rumayyan satisfies all "stringent criteria" laid down in the law for appointment as independent directors of a listed company, the company said in a filing to stock exchanges.
The proposal itself was never in danger of failing given the over 50% shareholding of Ambani. Though, had more institutional investors opposed it, the company may have had to contend with a loss of image, especially given the high profile of the personality involved.
Interestingly, Al-Rumayyan will now be on both company boards if and when the RIL-Saudi Aramco deal is finalised.