Mumbai: Yes Bank Ltd’s co-founder and outgoing MD and CEO Rana Kapoor wants to be named as the bank’s non-executive chairman once his term ends on 31 January, according to documents reviewed by Mint. The document, a draft of the consent terms being negotiated between the two promoters of the bank, says that if Kapoor’s appointment as a director on the bank’s board is approved by the Reserve Bank of India (RBI) and shareholders of Yes Bank, he will be either the non-executive chairman or managing director and chief executive or a non-executive director.

Existing norms, however, do not allow reappointment of a whole-time director on the bank’s board before two years from the date of stepping down. To become eligible for the post of a managing director, Kapoor will have to wait till at least February 2021.

Yes Bank, during its 13 December board meeting, will recommend names for the chairman’s post to RBI as well as consider appointment of independent directors, the Press Trust of India reported Wednesday.

Yes Bank did not respond to an email seeking comment. People close to Madhu Kapur, the bank’s other promoter, said the consent agreement has not yet been finalized and there could be more negotiations.

On 17 September, RBI declined to approve Kapoor’s reappointment as the bank’s CEO for three years.

The preparation of the draft consent pact between Yes Bank’s promoters comes closely on the heels of a ratings downgrade by Moody’s Investors Service on Tuesday. Moody’s downgraded the bank, citing corporate governance concerns and impact of leadership change on its growth plan.

Shares of Yes Bank fell 11.71% to 161.70 apiece on the BSE on Wednesday amid investor worries over the developments.

In the draft consent agreement, Kapoor confirmed that the nominee director that he appoints on the board of Yes Bank “shall at all times be a non-independent non-executive director", except in the case where appointment of Kapoor himself (nominated by Kapoor and Kapur) is approved by RBI as either MD & CEO or non-executive chairman or a non-executive director. If Kapoor himself is appointed as the chairman, he will be on the bank’s board as a non-independent executive director, according to the consent terms.

This is part of the ongoing negotiations between Rana Kapoor and Madhu Kapur (wife of co-founder late Ashok Kapur)—the two estranged promoters of the bank—to settle their legal disputes.

The draft added that the two partners will have the right to jointly recommend the name of the chairman and managing director and CEO of Yes Bank.

“The successors, legal representatives and assigns of Ashok Kapur confirm that subject to approval of RBI and the shareholders of Yes Bank, they will consent and approve the appointment of Rana Kapoor either as non-executive chairman or MD & CEO of Yes Bank and such consent shall be deemed to be given by them at all times," read the document.

The consent terms essentially imply that the two promoters of Yes Bank end their differences with each other in the court over the terms mentioned in the bank’s articles of association that was legalized by MCA in 2005. Over the past 10 years, since the death of the bank’s co-founder, chairman and Madhu Kapur’s husband Ashok Kapur, the two families have been contesting each other over board-level appointments, bonuses, dividends and other business-related issues.

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The consent terms are aimed at putting an end to such disputes.

“Madhu Kapur and her family want the bank to bear the former’s legal expenses since they are co-promoters of the bank. This is one of the demands, which is also a part of the ongoing negotiations between the two promoters, but is not mentioned in the consent agreement," said a person familiar with the discussions.

If both the promoters agree on the consent terms, it will be solemnized by the Bombay high court and will be annexed with the existing articles of association.

The consent terms also state that the one director nominated by each Indian partner (Kapoor and Kapur) will not be liable to retire by rotation.

“Further, the successors, legal representatives and assignees of Ashok Kapur confirm that the one nominee director that they appoint on the board of Yes Bank shall at all times be a non-independent non-executive director…," says the consent agreement.

The two Indian partners will have the right to jointly recommend the name of the chairman and Yes Bank CEO and MD.

The successors, legal representatives and assigns of Ashok Kapur confirm that subject to approval of RBI and the shareholders of Yes Bank, they will consent and approve the appointment of Rana Kapoor either as non-executive chairman or MD and CEO of Yes Bank and such consent shall be deemed to be given by them at all times. In every other case, the Indian partners will have the right to jointly recommend the name of the non-executive chairman and MD & CEO of Yes Bank, adds the agreement.

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