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Business News/ Companies / News/  Madhu Kapur raises corporate governance issues at Yes Bank

Madhu Kapur raises corporate governance issues at Yes Bank

Alleged favourable treatment to wife, daughter of CEO; Bombay high court to next hear case on 12 August

The Madhu Kapur group wanted the minutes of Yes Bank’s board meetings in 2009, 2012 and 27 June 2013. Photo: Abhijit Bhatlekar/Mint (Abhijit Bhatlekar/Mint)Premium
The Madhu Kapur group wanted the minutes of Yes Bank’s board meetings in 2009, 2012 and 27 June 2013. Photo: Abhijit Bhatlekar/Mint
(Abhijit Bhatlekar/Mint)

Mumbai: Madhu Kapur raised corporate governance issues at Yes Bank Ltd in an affidavit filed in the Bombay high court on Monday in the case over the rejection of her daughter’s nomination as a director.

These issues related to what she alleged was favourable treatment to the wife and daughter of managing director and chief executive officer Rana Kapoor. The court will hear the case on 12 August.

Madhu Kapur is the widow of Ashok Kapur, one of the promoters of Yes Bank along with Rana Kapoor. Rana Kapoor’s wife Bindu Kapoor and Madhu Kapur are sisters. Madhu Kapur’s daughter Shagun Gogia had been denied a seat on the board by Yes Bank.

Mint has reviewed the affidavit filed on Monday. In it, Kapur questioned whether the bank had applied the same corporate governance standards to Kapoor’s family as it did while considering Gogia’s nomination as a director.

A Yes Bank spokesman said its response would be made in court.

“As a matter of policy, Yes Bank does not respond to queries, which are sub judice," the spokesman said in an email. “The bank has suitable response with regards to the maintainability, legality and sustainability of the allegations reflected in your queries, which shall be submitted before the court at the appropriate time."

Yes Bank has maintained that the rejection of Gogia’s nomination was a purely professional decision.

Gogia’s nomination was rejected because “she was considerably short on important criterion/expertise in any particular area prescribed by RBI (Reserve Bank of India) and did not have an adequate proven record", the minutes of the 27 June meeting, reviewed by Mint, showed.

The affidavit filed by Kapur on Monday is a reply to a 23 July rejoinder filed by Yes Bank, which cited Section 10 (A) of the Banking Regulation Act that every appointment made by a bank cannot be questioned in any court.

Kapur also said that even though Rana Kapoor had maintained that the promoter was a single individual, the affiliate companies—Yes Capital (India) Pvt. Ltd and Morgan Credits Pvt. Ltd, owned by his wife and daughter, respectively—were part of the promoter group.

“If it is contended that defendant Nos 4 and 5 (Yes Capital and Morgan Credits) are not a part of Rana Kapoor as provided in the articles, then the shareholding of Rana Kapoor together with his affiliates drops below the 10% threshold stipulated (in the articles of the bank)," the affidavit said.

In the affidavit, Madhu Kapur also questioned Rana Kapoor’s contention that the success of the bank had made the Kapur family richer by 2,000 crore. “A comparison of the performance of Yes Bank during the period 2008 to 2013 at peak prices would show that the performance of the bank is only half as good as that of its peer IndusInd Bank Ltd and perhaps better than Kotak Mahindra Bank Ltd," the affidavit said.

The affidavit also said that while Yes Bank shares have appreciated 850% between 2008 and 2013, IndusInd Bank shares have appreciated 1,500% in the same period.

Yes Bank shares ended at 363.30 on the BSE on Monday, down 1.06% from the previous close while the benchmark Sensex fell 0.78% to close at 19,593.28 points. Since 7 June, when the case was filed in the Bombay high court, Yes Bank shares have lost 28% compared with a 16% drop in the Bankex index.

Earlier on 15 July, the court had accepted an amended petition by Madhu Kapur opposing the appointment of three directors to the Yes Bank board and seeking the right to nominate Shagun Gogia as a director.

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Published: 29 Jul 2013, 03:57 PM IST
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