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Yes Bank battle set for court hearing, vote results
Madhu Kapur unlikely to succeed in stalling nominations of three whole-time directors through postal ballot
Mumbai: The promoters of Yes Bank Ltd, India’s fourth largest private sector bank by assets, may be set for a battle in the courts over the appointments of directors since Madhu Kapur, wife of the late promoter Ashok Kapur, is unlikely to succeed in stalling their nominations through a postal ballot, said two people close to the development.
add_main_image“We know that we will not be able to swing this vote. Yes Bank has enough shareholders, not to forget their company staff with employee stock options who will not go against their boss and, hence, have gone to court. Ultimately, the court order will have to be adhered to,” said one of the people who is authorized to speak on behalf of the Madhu Kapur group. Both the people declined to be named.
Madhu Kapur, along with her daughter Shagun Kapur Gogia and son Gaurav Kapur, filed a petition in the Bombay high court on Thursday, asking for the right to nominate directors on the bank’s board. Ashok Kapur, co-founder of Yes Bank, died in the November 2008 terrorist attack at the Trident Hotel in Mumbai.NextMAds
“The bank has not spoken to her in the last five years, so we had to take this step,” said the first person cited above. “We just want the right to nominate a director.”
The case comes up for hearing on Monday and so does the result of the ballot on the appointments of the three directors—Diwan Arun Nanda, Ravish Chopra and non-executive chairman M.R. Srinivasan—on a whole-time basis.
Madhu Kapur holds a 12% stake in the bank, while Rana Kapoor, Yes Bank’s managing director (MD) and chief executive officer (CEO), directly and through other family-owned ventures, holds a 13.72% stake. Based on Friday’s market capitalization of ₹ 18,235 crore, Madhu Kapur’s stake is valued at ₹ 2,188 crore while that of Kapoor’s is ₹ 2,502 crore.
The Kapurs want a board seat because it will give them a better idea of the internal workings of the bank in which they are substantial shareholders, according to Robin Roy, associate director, financial services, at audit and consultancy firm PricewaterhouseCoopers.
“Large shareholders like to have a direct say in the bank, ranging from the organization to decision-making and long-term strategy. It allows them a better understanding of the bank because the board is the eyes and ears of the shareholders,” Roy said, pointing out that even private equity investors insist on a board seat for their investments nowadays.
A Yes Bank spokesman said the bank will not act until Madhu Kapur makes the first move after the voting results.sixthMAds
“Everything now depends on the outcome of the ballot. Since it is a one-way dispute, it is for the opposite side to take the call on the future course of action, to which we will respond,” the spokesman said on Saturday.
Eighty percent of the votes cast were in favour of the appointment of the three directors, said a person close to the development. “Fifty-seven percent of the total shareholders voted, out of which more than 45% voted in favour of the appointments. The Madhu Kapur group did not even get votes proportionate to their shareholding,” this person said, adding that the result of the ballot will be declared to BSE on Monday morning.
“It will be then be produced in court,” this person said, while declining to be identified because the ballot results are supposed to be secret till they are shared with the stock exchanges.
Both Madhu Kapur and Gogia were present at the annual general meeting (AGM), but declined to speak with the media because the matter is in court. Kapoor, too, did not wait to address press queries. His wife Bindu and daughter Radha also did not speak with the media.
At the heart of the matter is the nomination of Gogia as a director in the bank.
In April 2009, the Kapurs had requested Yes Bank’s board to accommodate Gogia as director. But the board rejected her appointment, claiming she was not “fit and proper” according to the Reserve Bank of India’s (RBI) definition.
“Yes Bank has a problem with Gogia, but RBI has not rejected her nomination,” the person quoted earlier said.
The bank had rejected the nomination, an official said, but did not elaborate why Gogia was not considered fit and proper.
“After April 2009, we did not hear from them till the first letter came to Rana Kapoor on 4 June,” said the bank official, who did not want to be identified.
Madhu Kapur wrote to the Yes Bank MD and CEO on 4 June, raising the issue on nomination rights for the first time. This was after Bindu Kapoor, wife of Rana Kapoor, along with their daughter Radha, met Madhu Kapur at her residence on 4 June, a person close to the development said.
“The same evening, Rana Kapoor also met Madhu, but the latter was adamant on a board seat for Shagun. At this, Rana Kapoor said the board will consider any such move only at the next board meeting on 24 July. But Madhu went ahead and filed the suit,” said this person on condition of anonymity.
The notice was received by Yes Bank chairman Srinivasan and hand-delivered to Kapoor on Thursday, this person said.
Meanwhile, at the AGM on Saturday, Madhu Kapur objected to the proposed appointment of three whole-time directors on the bank’s board and was supported by some shareholders, following which it was put to vote.
Homa Pouredehi, a shareholder of the bank who opposed the resolution, said she sought a vote to enable a clear resolution on the issue. “I am a shareholder since inception and I believe Madhu Kapur is right in seeking a nomination on the board,” Pouredehi said. “I urged the board to settle the dispute, otherwise this uncertainty could hurt the reputation of the bank and hit valuations, just like another dispute hurt Reliance Industries.”
The Saturday meeting was conducted after the high court on Friday turned down Madhu Kapur’s petition seeking a stay. However, the court in its order made clear that the appointments, if confirmed, “shall be subject to the further directions of the court when the present matter shall be taken before the regular court”.
The feud is unlikely to have an impact on Yes Bank’s day-to-day management, said Kajal Gandhi, an analyst at Icicidirect.com, the retail broking arm of ICICI Securities Ltd.
“Rana Kapoor is firmly in charge of the bank and even a board seat to the Kapur group is unlikely to have any impact on how the bank is run,” Gandhi said. “There could be sentimental swings in the stock, but it is unlikely to have any effect on the bank on an internal or organizational level.”
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First Published:8 Jun 2013, 06:14 PM IST
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