Yes Bank Promoter Nominees Should Step Down From Board: IiAS
Yes Bank’s board needs to review position of directors nominated by promoters, said IiAS
The nominee directors of Yes Bank Ltd.’s promoters should consider stepping down from the board of the bank, said proxy advisory firm IiAS in a note on Wednesday.
The advisory came a day after co-founder Rana Kapoor sold more shares and came close to exiting his shareholding in the bank. Kapoor, together with the family of late Ashok Kapur, are deemed as ‘Indian Partners’ of the bank and were assigned special rights till they held at least 10 percent in the lender, as per the Articles of Association.
Kapoor now has only 900 shares in the bank, while late Ashok Kapur’s family holds 6.7 percent stake in the bank directly and 1.46 percent through Mags Finvest Pvt. Ltd. Hence, collectively, the shareholding of the ‘Indian Partners’ has now fallen below 10 percent.
This, IiAS said, means that the rights given to the ‘Indian Partners’ to jointly nominate directors to the board “also fall off.”
Because the nominee directors are not liable to retire by rotation, they can continue to hold their directorships. This needs to change. If the board believes that they are not contributing to the deliberations, then it is time for the nominees to step down. If the board believes that the nominees are adding value, it must insist that they become liable to retire by rotation.IiAS Note
The Articles Of Association of the bank give the ‘Indian Partners’ the right to jointly nominate three board members until they collectively hold 10 percent in the bank. These directors, who represent the promoters on the board are not liable for retirement by rotation.
Currently the bank’s board has two directors nominated by the promoters, Kapur’s daughter Shagun Gogia and Ravinder Kumar Khanna. The third board position remains vacant due to a long standing dispute between the two parties.
Yes Bank did not respond to queries asking whether any steps have been taken to alter the composition of the board. Shagun Gogia and Rana Kapoor did not respond to a message sent on Wednesday.
The bank, in a statement on Tuesday, said that its board will be meeting in November to finalise fund raising plans. Last month, Yes Bank had informed stock exchanges that it had received a binding offer for investments worth $1.2 billion from a North American investor, to purchase equity stake in the bank. The private bank is also in talks with other domestic and international investors, the management had said later.