Shriram Transport Finance Overrides Shareholders, Reinducts TPG’s Puneet Bhatia To Board
Promoters of Shriram Transport Finance Co. Ltd. have decided to reinduct on its board a director whom the public institutional shareholders had voted to remove recently.
Puneet Bhatia, India head of TPG Capital Asia, had been on the company’s board for almost 14 years and was due to retire by rotation. The company proposed his reappointment, but in the voting held on Aug. 19, over 83% public institutional shareholders voted against the resolution.
The resolution was presented during the annual general meeting of the company and the promoters voted in favour of Bhatia’s reappointment. Overall, 43% votes were in favour and 57% against the resolution.
Proxy advisory firms IiAS and SES, too, recommended that public shareholders vote against the resolution on account of Bhatia’s low attendance.
“He has attended 50% of the meetings held during FY20 and 41% of the meetings held over the past three years,” IiAS said in its July 28 voting advisory report. "We expect directors to take their responsibilities seriously and attend all board meetings; else, at the very least, 75% of the board meetings over a three-year period.”
Since the resolution got defeated, promoter company Shriram Capital Ltd. said this week that it has sought Bhatia’s consent to act as a director and be reinducted to the company’s board as a nominee of the promoters.
"The promoters and the key strategic partner, Sanlam Ltd., had backed his candidature in the past and will do so in future also," Shriram Capital said in a media release. TPG has been associated with the Shriram Group for over 15 years, it said, and has invested in the group from time to time.
"It was unfortunate that recently some of the shareholders voted against his continuance as a director, possibly solely relying on attendance not being very high for the board meetings," the company said.
As indicated above, he [Bhatia] has had several informal meetings with the promoters, management of the companies, creating synergy and offering valuable insights. These may be difficult to be captured in the statutorily disseminated data to the Shareholders, which only captures the board and committee meetings.Shriram Capital’s Media Release
BloombergQuint reached out to the advisory firms which had recommended shareholders to vote against Bhatia’s reappointment.
JN Gupta, co-founder and managing director of Stakeholders Empowerment Services, said a director cannot be a figurehead.
When you take up a role , you have to justify your existence and do your role sincerely. If you don’t attend the meetings, why should shareholders appoint you?JN Gupta, Managing Director, SES
The nomination committee needs to answer as to why have they disregarded the shareholder vote, Amit Tandon, founder and managing director of IiAS, said. It is fair to expect directors to be engaged with the board of the company in which they serve, but in the absence of any other parameter, board attendance serves as a measure of their participation, he pointed out.
In this case where Shriram Capital has decided to nominate Puneet Bhatia as nominee of the promoters, the question the nomination committee and the stakeholder committee need to answer is why have they disregarded the shareholder vote. They know all too well that once you enter the boardroom, you leave your other affiliations behind.Amit Tandon, Managing Director, IiAS
Bhatia has sought time to consider whether to accept the proposal made by the promoter. Shriram Capital said it expects to induct Bhatia on the board with the backing of all the stakeholders.