Madhu Kapur takes Yes Bank fight to shareholders

Mumbai: The Madhu Kapur group has taken its fight with Yes Bank Ltd managing director (MD) and chief executive officer (CEO) Rana Kapoor to the bank’s shareholders.

In a letter dated 30 May, Madhu Kapur, the widow of co-founder Ashok Kapur, asked shareholders to “vote against or at least abstain from voting in his favour” when Kapoor’s appointment comes up for approval at the bank’s annual general meeting (AGM) on 14 June.

Kapur said the bank notice for the AGM does not refer to the circumstances surrounding the Reserve Bank of India’s (RBI) approval of Kapoor’s appointment as MD and CEO till August 2015.

“Rana Kapoor could not have applied to be MD and CEO without my recommendation...secondly, the shareholders have not been informed that though the approval sought in August 2012 was for five years, RBI granted it only for three years. This speaks volumes and the shareholders must know about it. The entire proposal is not transparent and contrary to the Articles and Companies Act 2013.”

“I therefore beseech you to vote against this resolution or at least abstain from voting...it is the total denial of my right to jointly recommend with Rana Kapoor the chairman and managing director and the shareholders’ right to know the truth.”

A Yes Bank spokesperson said he had not seen the letter.

Accusing Kapoor of running the bank “as his own fiefdom without any checks and balances,” Kapur said she opposed resolutions appointing Mukesh Sabharwal, Radha Singh, Ravish Chopra, Brahm Dutt, Saurabh Srivastava and Vasant Gujarathi as independent directors in the bank.

“There is a system of independent directors but he (Kapoor) has used this system to his own advantage to such an extent that it is beyond belief,” Kapur said in her letter, a copy of which has been seen by Mint.

She said Yes Bank appointed the directors in June 2013 without consulting her, although she was a co-promoter of the bank.

She said Ravish Chopra was appointed Rana Kapoor’s nominee director last year. “I have challenged his appointment and the court has passed an interim order that his appointment will be subject to court order. This fact has not been disclosed by the bank in the annual report or in the corporate governance report or on the NSE (National Stock Exchange of India Ltd) or BSE. On the contrary, this year Rana Kapoor is attempting to convert this nominee director into an independent director. ”

“How can Ravish Chopra perform the duties of an independent director? Can he judge the performance of Rana Kapoor which by law he is obligated to do as an independent director?,” Madhu Kapur asked in the letter.

Also challenging the appointment of Ajay Vohra and Diwan Arun Nanda as independent directors, Madhu Kapur said that although “no resolution to this effect is put before the shareholders”, Kapoor was trying to get approval by only a note to shareholders.

“In this notice, the bio-data of Diwan Arun Nanda omits the most relevant fact that he was a member of the audit committee of Kingfisher Airlines just before he joined Yes Bank. The omission of this fact from Nanda’s bio-data cannot be through inadvertence but has to be deliberate. May I ask will such ‘independent directors’ help protect your interest?”

“Such conversion of all the directors chosen by Rana Kapoor into independent directors having a fixed term underlines his ploy to pack the board with his people even after he ceases to be the managing director of the bank,” she said, urging shareholders to vote against appointing the independent directors in the bank.

Madhu Kapur’s late husband Ashok Kapur, who died in the November 2008 Mumbai terror attacks, co-founded Yes Bank with Rana Kapoor. She and Rana Kapoor’s wife are sisters.

Madhu Kapur and her family took Rana Kapoor and Yes Bank to court in June 2013 demanding the right to nominate a director on the bank’s board, citing the articles of association of the bank.

Madhu Kapur’s daughter Shagun Kapur Gogia had also applied to be a member of the bank’s board, as directed by the court in June 2013, but the board rejected her nomination in a meeting held the same month, ostensibly because she does not have sufficient experience to be a director.

In her letter, Madhu Kapur also asked shareholders to vote against the appointment of M. Srinivasan as non-independent director and non-executive chairman of the bank.

“The board had appointed him in January 2013 as chairman subject to shareholders approval. RBI granted approval for one year on April 2013...now as his term comes to an end in the next three weeks on 27/6/2014 the shareholders are confronted with a fait accompli and asked to take RBI approval on record. I submit that RBI approval being taken on record cannot be any substitute for shareholders’ approval. Therefore I request you to even reject taking on record such RBI approval,” she said.

Madhu Kapur holds a 12% stake in Yes Bank, while Rana Kapoor, directly and through other family-owned ventures, holds a 13.59% stake in it, according to the latest shareholding pattern of the bank updated till March 2014.​