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Business News/ Companies / News/  Court tells Yes Bank to consider Shagun Gogia for director’s post
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Court tells Yes Bank to consider Shagun Gogia for director’s post

Bombay high court directs Yes Bank to consider Gogia’s appointment at a board meeting on 27 June

Yes Bank’s board had earlier been scheduled to meet on 24 July. The appointment of the new directors will be subject to the final court order. The case will come up for hearing on 1 July. Photo: Ramesh Pathania/Mint (Ramesh Pathania/Mint)Premium
Yes Bank’s board had earlier been scheduled to meet on 24 July. The appointment of the new directors will be subject to the final court order. The case will come up for hearing on 1 July. Photo: Ramesh Pathania/Mint
(Ramesh Pathania/Mint)

Mumbai: The Bombay high court on Monday directed Yes Bank Ltd to consider Shagun Kapur Gogia, daughter of late co-founder Ashok Kapur, for the position of a director on its board.

The order is a setback for Yes Bank managing director and chief executive Rana Kapoor, who has been resisting giving her a board seat.

The board, earlier scheduled to meet on 24 July, will now meet on 27 June as directed by the court. The high court also said the appointment of new directors on the bank’s board will be subject to its final order. The case will come up for hearing on 1 July.

Madhu Kapur, along with her daughter Gogia and son Gaurav Kapur, had filed a petition in the Bombay high court on Thursday asking for the right to nominate directors on the bank’s board.

The Madhu Kapur group on Monday said though Gogia’s nomination was not a part of the original case, they will now nominate her to the board after the court’s direction.

Yes Bank, in a media statement, said the order “is in line with Yes Bank’s proposal as per its letter dated June 6, 2013...(when) chairman M.R. Srinivasan and MD and CEO Rana Kapoor...had offered to discuss the name of Mrs. Madhu Kapur’s nominee at its scheduled board meeting to be held on 24 July 2013."

In the court, Yes Bank was initially reluctant to advance the board meeting to June citing difficulties in getting all the directors to attend it, but the court insisted on the meeting taking place before the next hearing on 1 July.

The families of the founders of Yes Bank—Ashok Kapur, who died in the November 2008 terrorist attack on Mumbai, and Rana Kapoor—are locked in a dispute over the nomination of three people to the board of the bank.

Kapoor’s wife Bindu and Madhu Kapur are sisters, and Gogia is his niece.

On Monday, Justice S.J. Kathawala, after hearing the petition, said, “The way she (Gogia) has addressed (Rana Kapoor) in her letters, it seems that the dispute has not gone ugly. Let’s sort it out before it gets ugly."

Kathawala was referring to a letter written by Gogia to Kapoor in May requesting him to consult the Kapur family before appointing the three directors. In her letter, which was produced in court on Monday, Gogia refers to Kapoor as “Dear Rana Uncle".

On Monday, J.J. Bhat, senior counsel representing the Kapur family in the court, said, “We don’t want this dispute to come out in public. We will follow the path shown by the court."

Virendra Tulzapurkar, senior counsel representing Kapoor, too, said his client was looking for a quick resolution to the matter.

On Friday, the Bombay high court had allowed Yes Bank to hold its shareholders’ meeting and appoint directors, turning down a petition asking for interim relief by Madhu Kapur. She had challenged the nominations of Arun Nanda, Ravish Chopra and M.R. Srinivasan as wholetime directors.

Kapur and her family want the right to be consulted on any appointment of directors to the board. They have based their argument on article 110(b) of Yes Bank’s articles of association.

Kapur holds a 12% stake in the bank, and Kapoor, directly and through other family-owned ventures, holds a 13.72% stake, making him the bank’s largest shareholder and co-promoter.

Based on Monday’s market capitalization of 17,610 crore, Kapur’s stake is valued at 2,113 crore and that of Kapoor’s at 2,416 crore.

Yes Bank was reluctant to give Gogia a board seat, ostensibly because she does not have enough experience to sit on a bank board.

“Just by doing some venture funds she cannot be allowed to sit on a bank board because banking is a sensitive industry as it is dealing with public deposits," a person familiar with the developments in Yes Bank said. He did not want to be identified.

Gogia, an MBA in finance from the Indian School of Business, is a partner in Tuscan Ventures Pvt. Ltd, a private equity firm. She has also worked with ICICI Venture as vice-president.

“There is nothing in the RBI’s (Reserve Bank of India’s) fit and proper criteria which prevents Gogia from becoming a director in the bank," said a banking consultant, on condition of anonymity. “Unless she has some criminal cases pending or allegations of financial irregularity, they cannot."

Yes Bank fell 2.57% to 490.15 a share on Monday on BSE, while the benchmark index Sensex rose 0.06% to close at 19,441.07 points. The banking index, Bankex, dropped 1.12% to end at 13,828.43 points.

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Published: 10 Jun 2013, 01:21 PM IST
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